The circular economy offers great business opportunities. In 2015 McKinsey and the Ellen MacArthur Foundation estimated that it could even generate a net economic benefit of 1.8 trillion in Europe by 2030. But, the circular economy can never lift off without businesses putting the concept into action. And with innovative circular companies like Product-as-a-Service Models (PaaS) struggle to find financing, this remains a big barrier. On the other hand, we see that many financiers are starting to set ambitious targets to grow their circular portfolio. but to this day the PaaS love story between entrepreneurs and financiers has been lost in translation.
The main issue is a lack of knowledge on both sides and the absence of a financial narrative for Product-as-a-Service models that fit within the risk parameters of financiers. More concretely, PaaS models are, sometimes falsely, perceived as risky due to the way businesses present themselves and how financiers assess risk.
To close the knowledge gap between circular entrepreneurs and financiers, Circle Economy has developed the PaaS Question Kit: A comprehensive guide to PaaS business models. The Kit leads both entrepreneurs and financiers through a series of questions they need to ask themselves before starting their conversation. The ultimate goal of the PaaS Question Kit is to remove the knowledge barrier and open up more financing opportunities for circular companies.
After presenting the Kit to our network the initial responses from both sides have been positive. "The PaaS Question Kit gives a perfect overview of the advantages and the complexities of a PaaS business model. The questions and manual are an easy tool to use in preparation for financial interviews, both with financiers and end-users of our product" says Pim Dekkers, founder from Occony, a high-end circular furniture company.
Joost van Dun, Circular Economy Lead at ING Sustainable Finance commented: "Paas business models are seen as one of the most powerful business models of the Circular Economy. Within ING there is a clear ambition to increase our support to our clients who transition to this model. The PaaS Question Kit is a helpful tool in this process".
The PaaS Question Kit is available open-source. We would love to receive feedback from circular entrepreneurs and financiers alike to increase our understanding and make necessary improvements. We also provide tailored workshops and support to financiers and entrepreneurs on these topics.
We would love to hear from you! For more information, questions and comments please feel free to reach out to our finance team!