How the circular economy will change our world 

Many companies are transforming their operations from a linear towards a more circular economy. The transformation process often takes a long time, is complex and costly.  Developing and promoting the circular economy is not just beneficial for the environment, but obviously it creates the possibility of better and more sustainable access to raw materials in the long-term. It might help to reduce the dependency on international suppliers and can strengthen the own position in the value chain. One example is ESy-Labs GmbH, a portfolio company of HTGF based in Regensburg, Germany. Esy-Labs uses electrosynthesis to extract valuable raw materials such as zinc from waste that currently goes to landfill. 

We have to start now! 

The market for circular economy companies and start-ups has been growing steadily in recent years. Many consumers have recognised the importance of sustainable raw materials. And the political and social tailwind is also helping, for sure. We need to take off now and invest optimally to make ideas that have not yet been considered fundable. This requires venture capital, but also networking between science, politics, business and start-ups. 

Changing established processes is always costly and often takes many months or even years. Companies need to learn how to transform their supply chains without interrupting their business. One very important aspect is how companies return raw materials to the cycle once they have been used. This type of recovery is often complex and expensive. And it competes with the simple and often cheaper procurement of new materials in the linear economy. 

One solution: reducing complexity! 

One way out of this dilemma is to reduce complexity through innovation – as demonstrated by Eeden GmbH from Münster (Germany). The HTGF portfolio company transforms textile waste into valuable raw materials for new fibres. In a green chemical upcycling process, cellulose is extracted from old fabric scraps, which in turn can be used to make viscose or lyocell fibres. This enables textile manufacturers to comply with increasingly stringent environmental regulations. With its innovative technology, Eeden is opening a large cycle in which old textiles can be turned into new, high-quality materials. 

Such business models hold a clear advantage for start-ups over established companies. They don’t have to adapt to existing processes. They can implement innovations straight away. Moreover, when start-ups break new ground, new needs arise. In the textile example, this could be machines that sort fabrics. This creates space for other companies. And with it, a new sector of the economy. So, the circular economy is not just a cycle. It is the starting point for new major developments. 

About the author
Dr Nik Raupp is passionate about the circular economy and a recognised and experienced recycling expert. The senior investment manager worked in the chemical industry for ten years before joining High-Tech Gründerfonds. More than half of that time was spent working on sustainable chemistry and renewable raw materials.