Grassroots solutions to large-scale problems: How circular start-ups contribute to the transformation towards a circular economy

The circular economy (CE) is a much contested and praised concept in the context of sustainable development. It is often proposed as a panacea to a sustainable future but also faces significant criticism (e.g., measurability, technical feasibility). In principle, CE concepts aim for higher resource efficiency than current linear systems (produce→use→waste) by reducing material inputs, reusing products, and recycling resources. This study is the first to zoom in on the cases of start-ups that build circular business models. We call these circular start-ups (CSUs). These organisations are examples in which CE is successfully implemented on the micro-level. they can have direct effects on driving circular innovation, and also influence their wider systemic environment. The research question of this project is ‘How can circular start-ups contribute to the transformation towards a circular economy?’ To answer this question, the business models, founder personalities, as well as system building activities of CSUs are analysed. CSUs contribute to larger CE transformations as drivers of often neglected bottom-up dynamics. CSUs have direct and indirect impacts on circular transformative processes. Direct contributions mostly stem from the scaling of CSUs’ business models, their contributions to wider CE mission definition, and their shaping of a new form of ethics in for-profit business. CSUs build ‘minimum viable’ circular innovation systems and thereby provide breeding and learning ground as well as proof-of-concepts for wider CE innovation. In terms of indirect contributions, CSUs’ postulate, standardise and even govern innovative forms of value creation (e.g., open innovation, value co-creation, servitisation, strategic deliberation). Corresponding changes to common business practice and value creation logics are often path-breaking and disruptive to linear regimes. They also act as role models and stimulate changes in socio-cultural norms by proposing new forms of consumption. We observe an annually increasing number of start-ups that follow CE principles in their business building. These organisations are more and more able to attract funding as various examples of early stage up to late-stage investments have shown in the recent past. We expect that CSUs will play an important role in the CE transformation and that they deserve more attention from policymakers, corporates, consumers and the scientific community