Innovation for Sustainability: The driving force of circular economy start-ups
28 March 2023 – The Cambridge Institute for Sustainability Leadership and the Tsinghua-Cambridge Joint Research Initiative interviewed 60 start-up founders from various sectors to better understand the role of entrepreneurship in a circular economy transition. This new report offers insight into the alternative practices of innovative circular businesses seeking commercial success and positive social impacts that may not be achievable through classic commercial strategies.
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Since the beginning of 2022, circular start-ups have started to gain significant funding. Private equity funds dedicated to investing in circular businesses have begun to emerge. In the UK, London has earned itself the reputation as a hotspot for circular start-ups, mostly thanks to the city’s vision and commitments to strengthen collaborations and engagement among small and medium-size enterprises (SMEs) and start-ups to leverage the benefits of the circular economy transition. These movements indicate that a fundamental, structural transition to build the foundations of a circular economy may be under way.
Circular economy is often heralded for its potential to achieve ‘green’ growth, decoupling economic activity from the consumption of finite resources. However, transitions to circular economy are hindered by the complexity of global supply chains and fragmented markets. System-level change is key to the circular transition. Entrepreneurs have been recognised as a major conduit and are calling for a ‘circular disruption’ - a more radical, system-wide transformation that may fundamentally change the existing socio-technical system.
This study aims to better understand the role of entrepreneurship in this transition. To achieve this, the study explores the motivations that drive entrepreneurs to set up the businesses, the value propositions and business models, the challenges they have faced, and how they have overcome adversity. The findings have been analysed qualitatively, distilled, and categorised in four threads: people, context, business model, and challenges/barriers.
While challenges remain, such as low awareness of CE as a concept, low investment, and unintended adverse effects of current CE practices, circular entrepreneurs can be the driving force behind the circular transition. Some of the qualities of founders in the findings that position them as a driving force include:
- Intrinsic motivation and a determination to be a force for change.
- A holistic view of circular economy and awareness of its ultimate goals.
- The creation of new markets for novel circular products and services.
In summary, this publication outlines why entrepreneurs are driving forces in accelerating circular transition and what makes them successful at ‘doing good and doing well’ in an innovation ecosystem that is conducive for their growth.
"At a time when the world faces immense challenges related to climate change and resource depletion, entrepreneurship has emerged as a key driver of the circular economy transition. As we move towards a more sustainable future, we need visionary leaders who are committed to creating innovative solutions that deliver both economic and environmental benefits. This report provides important insights into the role of entrepreneurship in the circular economy and offers inspiration to those who want to be part of this transformative movement."
Jie Zhou, lead author and Programme Manager at CISL.
Citing this report
The University of Cambridge Institute for Sustainability Leadership (CISL) (2023). Innovation for Sustainability: The driving force of circular economy start-ups. Cambridge: The University of Cambridge Institute for Sustainability Leadership.
Find out more insights on the circular economy transition from CISL
- Driving the circular economy through collaboration and disruptive change
- The Circular Economy Showcase Roundup: “If you want to change the world, you need to throw a better party than those destroying it” - Toast Ale
- Founders to Funders: Key trends and reflections of fundraising for circular disruptors & innovators