Circularity Capital is a private equity fund accelerating Growth & Innovation in the Circular Economy.
Company:
Circularity Capital
Geography:
Europe
Asset Class:
Private equity fund
Strategy:
Early/Growth stage
Sector:
Circular Economy
Opportunity:
In the last decade, the circular economy has become a highly relevant business topic, especially in Europe where the linear production model has seen its limits and the concept of circularity has moved beyond proof of concept to being supported by a strong regulatory environment. McKinsey estimates USD 97 billion is needed in the circular economy in Europe alone. The fund’s strategy seeks out investment opportunities in small and medium-size enterprises (SMEs) operating in the circular economy.
Results:
- Improved efficiencies by “designing out” waste
- Reduction in energy demand and associated greenhouse gas emissions
- The positive impact of reduced primary resource extraction
- Decoupling of economic growth from resource constraints
- Regeneration of natural capital through the “biological” economy
MORE ABOUT THE PROJECT
Challenge
Today’s economic growth is predominantly based on a linear “take-make-dispose” model of value creation. This linear approach is reliant on cheaply available input resources and loses significant value in the form of waste and poor asset utilization.
A series of megatrends are now constraining traditional linear growth and acting as macroeconomic drivers of the shift to the circular economy: increasing demand from the middle class, technology revolution, user changes and a lack of security of input supply.
Solution
The fund focuses on identifying investment opportunities in European growth SMEs operating in the circular economy to achieve greater financial returns. The fund provides SMEs with the following support:
- Strategic support and guidance for investee businesses to develop and deliver their strategic plans
- Specialist operational support
- Access to knowledge by facilitating access to the world’s leading think tanks on the circular economy
- Access to expansion markets by connecting investee businesses with potential customers, strategic partners and market development opportunities
Impact
A circular economy aims to “design out” waste. Waste does not exist; products are designed and optimized to re-enter the economy while maintaining maximum value. The ability to cycle products, materials, and components at their highest integrity defines the circular economy and sets it apart from disposal and recycling – where large amounts of embedded energy, materials and labor are lost.
The circular economy provides a framework for decoupling business growth from resource constraints, enhancing resource productivity and driving competitive advantage. In a global macroeconomic environment that is driving the transition away from an inefficient linear economy to a circular economy, companies that seize the growth opportunity can generate premium returns for investors.