For the first time, our new initiative CIRCULAR REPUBLIC has published a start-up landscape for the circular economy sector, showing: the circular economy is increasingly becoming the core of the business model of young companies, especially in Germany.
CIRCULAR REPUBLIC empowers companies and start-ups to realize circular economy innovations and develop new business models. The initiative connects relevant actors as a platform to set system-changing impulses along the entire value chain.
With the landscape, the team has created an overview of circularly operating start-ups in Germany that is unique to date on this scale. In the UnternehmerTUM ecosystem, the initiative is starting on particularly fertile ground: "It was fascinating to see that a quarter of all circular start-ups already come from the local ecosystem. It's a similar story with the capital flowing into these innovations," says Susanne Kadner, Co-Founder and Head of Ecosystems at CIRCULAR REPUBLIC.
171 German start-ups that meet the criteria as "circular economy start-ups" were identified for the landscape. It becomes clear that Germany is a European pioneer regarding regenerative business models. But what are the requirements to be considered a circular economy start-up? According to this, the business model must have at least one of the following aspects anchored in their core: They provide products made from renewable or recycled materials (e.g., the start-up traceless), they rely on "product-as-a-service" (e.g., everphone), they serve users as a sharing platform (e.g., TIER), they contribute to extending the lifetime of a product (e.g., Rebike), focus on recovering materials from effects at the end of their life (e.g., tozero) or, for instance, support companies in making non-circular value chains more sustainable (e.g., cirplus).
Products made from renewable or recycled materials ahead.
Start-ups are firm in the first category: about one-third are dedicated to manufacturing products from renewable or recycled materials. They're followed by technology solutions or services to enable circular processes, and start-ups focused on recovering materials. As-a-service business models still represent a minority but hold great potential.
Within Europe, Germany provides most circular economy start-ups. France and the Netherlands follow this. Within Germany, the Munich metropolitan region leads the way with 49 start-ups. It is followed by Berlin (45 start-ups) and the Rhine-Ruhr region, with 18 start-ups.
Investments in circular economy start-ups have increased significantly in recent years and have risen sharply in the last two years. In 2022, around 5.4 billion US dollars were invested worldwide. Likewise, the proportion of total available venture capital invested each year continuously increases. It can also be observed that the levels of investment per start-up increase significantly throughout financing rounds - an indication of successful acquisitions over a more extended period. Surprisingly, although they represent a minority, most money flows into start-ups with as-a-service business models and sharing platforms, especially those assigned to the mobility sector.
More diversity in the circular economy sector
Usually, the share of female founders of start-ups is only about 20%. In contrast, start-ups in the circular economy sector show a 50% higher founding activity of women. This is especially true for start-ups operating in the areas of recovery of materials and use of renewable or recycled resources: Almost half of all founders here are female.
We want to enable companies and start-ups to jointly implement innovations in the circular economy.
Niclas-Alexander Mauss, Co-Founder and Head of Operations at CIRCULAR REPUBLIC
Diversity also promotes the networking idea that underlies the landscape: The goal is to show young and established companies the innovation potential of a circular economy, to strengthen collaboration, and to initiate projects together.
"We want to enable companies and start-ups to jointly implement innovations in the circular economy. Different actors and perspectives should join forces to create system-changing momentum along the entire value chain. With the help of the landscape, we want to share knowledge and direct attention to the diverse opportunities and possibilities of the circular economy," says Niclas Mauss, co-founder of CIRCULAR REPUBLIC.
Own data as well as data from TechCrunch and Tracxn were used as a basis for the survey.
