Born circular

Compared to large established firms, circular startups develop more ambitious circularity strategies and engage in more circular innovations, according to ‘Disruptors: How Circular Startups Can Accelerate the Circular Economy Transition’. This white paper was published by Utrecht University researchers Julian Kirchherr, Thomas Bauwens and Marko Hekkert in partnership with ING, Circle Economy and the Amsterdam Economic Board. It should come as no surprise that startups lead the way when it comes to circular ambitions. “Startups are born circular, while large companies have older products and work approaches that are not circular,” says Bauwens.

Ambitious strategies

The researchers looked at the business models of 147 circular startups in the Netherlands and contrasted them with those of large, well-established firms engaged in circular economy practices. They found that startups generally developed more ambitious circularity strategies. “As new market entrants, circular startups can lead the way to the next level of circularity by developing circular innovations and disruptive business models,” says Kirchherr.

Transitioning to a circular future

Netherlands rates as a European leader by recycling 80% of all its waste. However, this recycling is usually about downcycling and not upcycling – resulting in material of lower value than the original. Obviously, this is not sustainable. According to experts, a transition towards a circular economy is key to achieving sustainable economic development. More attention must be paid to prevention, reuse and repair – and this is exactly what new entrepreneurial ventures are doing.

Leasing over ownership?

Almost 35% of the circular startups covered by the research are based in Amsterdam. For example, Bundles is a startup that, instead of selling washing machines, leases them on a pay-per-wash basis. While retaining ownership of the machines, they advise customers on optimising the use of energy, water and detergent. When returned to Bundles, machines can be repaired or remanufactured before being leased to the next customer.

An example of a more mature Amsterdam-based startup, Fairphone, which seeks to design and produce smartphones with minimal environmental harm, is also exploring a similar service model where it retains ownership of its devices to make it easier to control the active reuse of its product components.

Finding the right balance

Circular startups 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 Bauwens. Hence, increasing the number of collaborations between circular startups and established firms seems to be the way forward.

As Hekkert observes: “Setting the right contextual conditions in place is essential to unlocking the potential of circular startups.