Growing and scaling circular economy start-ups from a Minimum Viable Product (MVP) to a market-ready product is crucial for turning ideas into successful businesses. While building a good product is undeniably important, it does not guarantee success in today’s competitive market. Transforming an idea into a profitable and self-sustaining business requires a well-defined strategy, meticulous planning, an understanding of potential challenges, and agility to pivot and find product-market fit.
Most importantly, it requires support and mentorship from various stakeholders, including industries/consumers (buyers of the product), investors (funders and early believers of the product), academicians (technology builders and validators), and in some cases, policymakers (prompters of policy and regulatory shifts). This journey can be long and overwhelming, and it demands a multipronged approach to make the product market-ready.
Below, we list some crucial elements necessary to turn an innovation into a resilient, successful enterprise:
- Access to Non-dilutive Grants: Venture capital remains the goal for several start-ups and plays a crucial role in their scale-up journey. However, start-ups may not always be ready to attract mainstream capital due to a lack of validation and the perceived risks associated with uncommercialised innovative technologies. Non-dilutive grants that support R&D, product development, and validation can help bridge this gap. Several government and philanthropic funds are available for Circular Economy innovations. For example, grants backed by the Department of Science and Technology (DST) require a rigorous evaluation process, adding credibility and scientific validation to start-ups. BIRAC BIG, Startup India Seed Fund, and National Bio-entrepreneurship Challenge are other examples of prestigious grants available to CE start-ups.
- Testing and Certification: Start-ups developing new materials or converting waste into valuable resources need to prove that their product’s functionality is at par with the conventionally used materials and meets the industry standards in terms of quality. While the industry/consumers will conduct their own tests, additional certifications from authorised laboratories such as Intertek, TUV (Technischer Überwachungsverein), various CSIR (Council for Scientific and Industrial Research)-funded organisations, etc. will enhance credibility. These certifications help reduce the gestation period of testing with industries and aid in faster adoption of the solution.
- Impact Assessment and Articulation: Circular Economy start-ups offer safer, environmentally sustainable and socially inclusive alternatives to conventional products and services. However, these claims need measurable and quantifiable evidence. Depending on the start-up stage, the product or the end goal and the audience, companies can validate their impact through assessment frameworks, such as a Life Cycle Assessment or Impact Assessment studies to measure specific indicators such as Greenhouse gas emissions (kgCO2e) released per kg of product. Impact measurement numbers are valuable for industries willing to adopt these solutions, helping them disclose their year-on-year sustainability performance per various frameworks (for example, BRSR, TCDF, CDP, etc.). Adopting circular economy innovations that lower carbon and water footprints helps industries perform better on sustainability-related parameters.
- Collaboration for Infrastructure for R&D and Manufacturing: Scaling start-ups producing new materials or managing challenging waste streams requires high capital expenditure. Start-ups do not necessarily have to build a full-stack architecture and can explore contract manufacturing, licensing, and decentralised production without compromising intellectual property (IP). For example, most start-ups working on industrial biotechnology-based solutions can use a Contract Research Organization (CRO) or Contract Development and Manufacturing Organization (CDMO) for piloting and manufacturing instead of establishing their own production units. This will enable validation and scaling without incurring the high capex costs of setting up industrial-scale facilities.
- Storytelling: Positioning the brand well to communicate the inspiration behind a start-up’s work goes a long way in creating a positive impression in the minds of the users. For instance, Ashaya’s video explains their innovative recycling technology to make the ‘world’s first recycled sunglasses from a packet of chips’ and also brings in a social angle. Powerful storytelling is also a tool to drive behavioural change, which is crucial for a sector like waste management where consumer behaviour significantly impacts success.
- Mentorship: Entrepreneurship can be a lonely journey, and having mentors for brainstorming, insights, market connections, and guidance on business and technology is invaluable. Identifying the right mentors and advisors is crucial across all stages of the start-up’s growth. Success is not just about building a great product but also about creating a supportive ecosystem that has a long-term impact. Scaling circular economy start-ups requires strategic planning and robust support systems. By combining the elements outlined above, start-ups can drive sustainable growth and truly convert their ideas into market-ready solutions.
Techtonic: Innovations for a Circular Economy, an initiative by Social Alpha, in partnership with H&M Foundation and Saamuhika Shakti, provides innovative circular economy start-ups financial support and access to pilot opportunities while providing agency to waste picker families to lead secure and dignified lives. This collaborative effort aims to drive innovation, improve business, social, and climate outcomes, and achieve mutual success by paving the way for a more sustainable future in India.
To learn more about this initiative, click here.
– Written by Sakshi Gore, Climate and Sustainability, Social Alpha