January 29, 2020

New Report: Circular Start-ups and the Circular Economy Transition

The circular start-up as a kick-starter for the establishment

Compared to large established firms, circular start-ups develop more ambitious circularity strategies and engage in circular innovations. This is concluded from a new white paper published by Utrecht University researchers Julian Kirchherr, Thomas Bauwens and Marko Hekkert in partnership with ING, Circle Economy and the Amsterdam Economic Board.

A transition towards a circular economy holds great promise for achieving a sustainable economic development. Yet, although the Netherlands has been one of Europe’s frontrunners when it comes to the recycling of materials, with 80% of all the waste generated being recycled, downcyclingrather than upcycling remains the rule, resulting in recycled material of lower value than the original. Moreover, far less attention has been paid to prevention, reuse and repair. The white paper outlines the roles played by new entrepreneurial ventures in the circular economy (called circular start-ups) to accelerate the transition towards a circular economy.

An example of circular start-up

Take the example of BikeFlip, a circular start-up recently founded by five students fromUtrecht University. The young company wanted to find a solution to the many abandoned and neglected kids bikes in the Netherlands. It refurbishes and offers second-hand kids bicycles on a subscription model for a fixed monthly fee, including the maintenance and repair of bikes. When the child outgrows the bicycle, the customer chooses a new one and returns the old one, so BikeFlip can deliver itto another customer. This start-up can thus truly contribute to a circular bike economy in the Netherlands.

More ambitious circularity strategies

The researchers provide an overview of thebusiness models of 147 circular start-ups in the Netherlands and contrast them with those of large, well-established firms engaged in circular economy practices. They found that, compared to large established firms, circular start-ups develop more ambitious circularity strategies. “As new market entrants, circular start-ups can lead the way to the next level of circularity by developing circular innovations and disruptive business models”, says Julian Kirchherr, principal investigator of the research project.

Tackling challenges through collaboration

Circular start-ups also face challenges, however. “It may be hard for a start-up lacking capital and economies of scale to enter a market that is already occupied by large players”, says Thomas Bauwens, lead author and post-doctoral researcher at the Copernicus Institute of Sustainable Development at Utrecht University. Collaborations between circular start-ups and established firms are paramount for tackling these challenges. “Established companies can reach out to help circular start-ups, for example by unlocking their network, by acting as off-takers or by delivering production capacity”, Thomas Bauwens explains.

The white paper concludes by providing policy-makers and businesses recommendations to create a supportive environment for circular start-ups, for instance through the use of public procurements and tax policies to boost market demand for circular start-ups’ products and services. Marko Hekkert, director of the Copernicus Institute of Sustainable Development, concludes: “Setting the right contextual conditions in place is essential to unlock the potential of circular start-ups in the transition towards a circular economy.”

Read the full report here

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