The Future Of Circular Economy: Startup Investment Trends And Predictions

The post-Industrial Revolution economies have been adopting a ‘take, make, dispose’ model to achieve the goals of modernisation faster. The agenda for growth in those times was to burn through resources without considering the damage it was doing to the environment. But things started to change when countries began noticing the damage caused by such unsustainable growth models.

The circular economy seeks to address this by doing away with trash completely. It aims to extend the life and use of resources, materials, and goods, rethink products and business processes, create creative solutions and service models and promote more sustainable consumption patterns. 

The circular economy is projected to help reduce emissions by 40%, generate nearly 2 Mn jobs, and become a $2-3 Bn market in the coming years, according to the Circularity Gap Report 2024 released by Deloitte and the Circle Economy Foundation.

A core tenet of circular economy is the conversion of a linear supply chain to a closed-loop structure. This entails using strategies like durable, modular, and simple disassembly product design, which facilitate the recovery and reuse of materials and components. 

It also entails putting in place effective reverse logistics systems to make it easier for things to be returned and refurbished when their usage is finished. A key role for startups can be played in completing these tasks.

Key Reasons For Surge In Circular Economy Investment

In line with the circular economy model, emerging startups in India with the latest tech advancements drive the industry towards sustainability. Close to 400 such startups in India are working on areas ranging from sustainable waste management to green technology. 

Despite being in its early stages, India’s circular economy had drawn $1.8 Bn in investments between 2016 and 2021.

The government of India has always encouraged these startups. For example, to facilitate India’s shift from a linear economy to a circular economy, NITI Aayog has recommended specific actions to address issues with using waste as a resource and provide a thorough legislative framework for developing an advanced recycling sector in India. 

NSRCEL, the leading incubation centre for startups, emerging businesses and women entrepreneurs in India supports early-stage startups dedicated to creating a climate-positive, low-carbon world.

Here are some areas where we can expect to see a surge in investment for Indian circular economy startups:

1. Investors will be drawn to startups that emphasise cutting-edge recycling technology, especially for e-waste, plastic garbage, and building and demolition waste.
2. To meet the growing demand for sustainable products, eco-friendly, biodegradable, and reusable packaging solutions must be developed. Startups focusing on this area can expect to get a fillip in the coming years.
3. There will be a strong need for platforms that link customers to companies that provide repair services or that re-manufacture products.
4. There is a lot of potential for sustainable fashion startups that offer clothes rental services, repurposed apparel, and clothing take-back programs.
5. The other sectors where startups can implement cutting-edge, climate-mitigation techniques include agriculture and animal husbandry, particularly technology-driven water management and scientific bio waste disposal. Goods made of sustainable materials, such as edible silverware, will also guarantee the viability of startups.
6. Carbon capture is a rapidly expanding field that offers substantial investment prospects in India as a means of reducing climate change. Leading the way in Direct Air Capture (DAC) technology is the development of sophisticated capture materials and scalable, modular systems by startups. 

DAC technology removes CO2 directly from the environment. To guarantee carbon-neutral operations, these systems can be coupled with renewable energy sources.

Furthermore, strategies for carbon sequestration and storage, which entail burying captured CO2 underground or utilising it in industrial operations, are drawing more attention. As these firms tackle the twin problems of lowering atmospheric CO2 levels and advancing sustainable industrial practices, investment in them is essential.

Additionally, startups can combine circular economy lifestyle habits with climate action programs to conserve and preserve natural resources. Using cutting-edge models and technologies, those involved in climate action can reduce carbon emissions significantly while also lowering the cost of renewable energy for consumers. 

Across the textile and apparel value chain in India, a variety of businesses are developing with the ability to provide creative solutions to address the major industry concerns and hasten the sector’s transition to circularity. 

These businesses are focussed on creating novel products, processes, and service offerings, or combinations of them, at crucial stages of the value chain. Many of these ideas have the potential to upend current linear approaches to manufacturing, retail, and consumption if they are widely adopted and implemented. 

In Conclusion

The adoption of the seven principles of the circular economy – Reduce, Reuse, Recycle, Redesign, Remanufacture, Refurbish, and Repair – is encouraged by the circular economy movement, which believes that it is an urgent necessity.

Business parks, industrial clusters, and new initiatives should all be designed with these ideas in mind. India can be a manufacturing powerhouse and meet its climate change pledge if it has a stable and encouraging policy environment for a circular economy.