Why is the Circular Economy (CE) still trending among global startups?

The old "take-make-waste" model of the linear economy is unable to keep up with the rapid increase in the world's population. This explains the movement in favor of a circular economy. A closed-loop economy can be established through the usage of novel raw materials and waste reduction strategies. Therefore, CE solutions increase the lifespan of goods and materials while converting waste into resources. Startups and smart cities are relying on technology like Artificial Intelligence (AI), the Internet of Things (IoT), and blockchain for this, making them key components of CE trends. Hence, when coming to startup funding, it is important for founders, entrepreneurs, and investors to comprehend why CE is still trending among global startups!

The quantity of waste we produce has come under close examination in recent years. According to a World Bank estimate, annual worldwide waste production is predicted to increase to 3.4 billion tons over the next 30 years from 2.01 billion tons in 2016 (World Bank Group, 2018). Reducing the amount of landfill our actions create is now a challenge for both businesses and consumers. Slow growth is a result of competing interests, but the CE model might turn things around. Here, we examine the reasons for CE to be trending among startups.

CE entrepreneurs finding the potential to close the loophole in waste?

CE is merely another sustainability buzzword, in the eyes of some. However, it is a guiding philosophy that many cleantech entrepreneurs believe can reinvent every business, enhance the quality of life, and boost profitability — all while combating climate change.

“The circular economy is about redesigning our society around a philosophy of taking only what we need today without compromising the needs of future generations. We need to design products creatively so that they use existing materials and can become other products after end-of-life. Ultimately, for me, a circular economy means hope for the future.”

-Erika Reyes, Founder, and CEO of Inwit Solutions Inc -?

According to Accenture's research, the CE could add up to USD 25 trillion in economic output by 2050 and USD 4.5 trillion more by 2030 (Circular economy startups are closing the loop on waste, 2022). The innovation opportunities that come with circular practices like recycling waste, repairing, remanufacturing, sharing,, and other similar activities are said to be missed by people who are set in their ways. Yet, it takes a lot of work to change the culture's perspective from linear, wasteful processes to circular models, but the rewards are well worth it. Furthermore, many founders believe that CE models can boost the economy, protect the environment and prevent climate change, which is one of the reasons its trending among global startups.?

The demand for CE from consumers rises?

The CE, which promotes the sharing or passing on of goods rather than their disposal, is gaining ground for two main reasons. First off, the approach makes it simple for customers to live sustainably. Since our on-demand lifestyles do not always allow for waste prevention, we have historically been able to put off doing the right thing in favor of the simpler option. In order to achieve sustainable goals, the expanding number of CE solutions uses the same technology and digital tactics that power our on-demand lifestyles to simplify things. This is raising the engagement level.

Second, it aids in financial savings. Apps and platforms that can lower the price of ordinary things while also checking the box for environmental friendliness are more popular than ever. Knowing this, global startups are embracing this concept widely.?

The environmental and social benefits appeal to investors

The time when profit was the sole criterion used to evaluate a corporation is long past. Investors are now seeking out companies with distinct and important missions. Companies that not only function well but also do good deeds stand out in a sea of fast-growing startups. For investors, this feature makes the business and the offer more successful because consumers want to buy from and support companies that can fulfill an environmental or social purpose. The CE model's potential to create value makes it more and more enticing. The strategy enables companies to satisfy environmental goals while lowering sourcing expenses, resulting in more cheap products for consumers and quicker product availability.

Circular models are already being tested by bigger organizations like IKEA, despite the fact that adoption is still in its early stages (Fleming, 2020). A buy-back service, which allows customers to purchase fully constructed and used things for a fraction of the original cost, was recently introduced by the corporation. By making this change, a completely new group of consumers who are interested in making ethical, sustainable purchases are now accessible.

CE facilitating community spirit

Another reason why CE is trending among global startups is that it can aid in reconnecting communities. We are more connected to our own neighborhoods than ever after spending months indoors. Communities are connected, connections are built, and giving or receiving an item becomes much more than a commercial exchange thanks to CE principles and apps.

This neighborhood-focused strategy also has tangible low-carbon effects (The circular economy & carbon reduction targets, 2022). Furthermore, it may benefit more than one industry. The model can provide both tangible and intangible benefits to businesses and society by assisting them in reducing waste, assisting customers in saving money, and re-connecting communities.

“The circular economy model is a win for the environment, which is beneficial to everyone. Using recycled materials instead of Virgin glass fibers can reduce carbon emissions by 378kg per ton of composite waste.”

-Osayuki Osazuwa, Co-Founder, and CEO of Jeosal Materials -

In conclusion, newer technologies are gaining traction due to the massive adoption of CE. For instance, immersive technologies like Augmented Reality (AR) and Virtual Reality (VR) may be among them. Furthermore, the above-mentioned were a few of the reasons why CE is still trending among global startups.?