A Typology of Circular Start-Ups: An Analysis of 128 Circular Business Models

Abstract

The circular economy (CE) concept is much-heralded among policy-makers, scholars and industry professionals as an accelerated pathway towards sustainability. Business models are considered as a key enabler for the shift from a linear to a CE. However, research on circular business models has mainly focused on circular approaches adopted by incumbent firms, while the contributions of newly established firms (we call these 'circular start-ups') have been largely overlooked. This article scrutinises the business models of circular start-ups and how they may differ from those of incumbent firms embracing CE. For this, it analyses the circular business model strategies and innovations adopted by circular start-ups, relying on a novel data sample of 128 circular start-ups identified in three major CE ecosystems in Europe: the Randstad region in The Netherlands, Berlin and London. Based on this data, a novel typology of circular start-ups is proposed, distinguishing between five circular start-up archetypes: design-based, waste-based, platform-based, service-based and nature-based start-ups. The results also show that circular start-ups tend to embrace strategies corresponding to higher levels of circularity than those of incumbents. This preliminarily suggests that circular start-ups can indeed make major contributions to transitioning towards CE.