Talk Show #1
Imagine an economy with no waste. An economy where materials are reused over and over again, and an economy that drives the carbon neutrality of an entire country.
In about 30 years’ time, this may not be something to imagine anymore. The Dutch government has set itself the ambitious, yet necessary goal to move from a linear economy towards a fully circular one by 2050. In a collaborative effort with various public and private organizations and innovative companies, it is looking for ways to use raw materials in an ever smarter and more efficient manner, and to develop new methods for designing circular products.
The first big milestone from now on is set for 2030. By then, the Netherlands should see a 50% decrease in raw materials consumption, followed by full circularity in 2050.
Because of the importance and urgency of this topic, the first episode of this year’s Upstream Talks was dedicated to the circular economy. Upstream Talks is a series of talk shows, featuring entrepreneurs, investors and other experts from the local innovation ecosystem, and leading up to Upstream Festival later this year in September.
For this first episode, six guests – from entrepreneurs and scale-up founders, to corporates, investors and policy makers, came together at BlueCity Rotterdam to discuss the future of the circular economy in the Netherlands.
The circular economy – what is it exactly?
Ask Michel Schuurman, CEO Economy and Politics at MVO Nederland, and he’d tell you that there are tens of definitions out there. That is because the term ‘circular economy’ is a rather new one and every new definition tends to add something to the previous ones – or look at them from a slightly different angle.
“And still with all that, there are three key concepts that keep coming back in all definitions - the technical conditions, the process conditions and the business model conditions,” Michel says.
The technical conditions look at the materials and resources that are used to determine if a product is made circular. The process conditions are concerned with reverse logistics and recycling, and with whether or not a product remains circular at the end of its lifecycle, while the business model conditions determine if people are willing to pay for a product and eventually make this reverse logistics possible.
For Sabine Biesheuvel, founder of BlueCity Rotterdam, seeing entrepreneurs try to find the balance between these three concepts is a familiar sight. She works with circular startups on a daily basis, after all.
“Startups struggle with all three concepts and it is hard to get all of them right at the same time. Successful entrepreneurs have a pragmatism to their approach - they focus on the financial sustainability of their companies. Of course, they also have to work with the right materials but also partners to get the logistics in place. This is why it’s difficult to scale a circular company.”
Michel seems to agree. What he also points at is the second word in the term ‘circular economy’.
“We should not forget the importance of the economic aspect,” he says. “It is a lot about retaining and gaining value. BlueCity is a great example of retaining the value of a swimming pool and turning it into something valuable.”
Your sustainable mission requires money.
This is what both Michel and Sabine agree on. But it is also a lesson that Dorus Galama, co-founder of Gerrard Street, has learned the hard way. With Gerrard Street, Dorus and his team aim to make circular electronics - in their case headphones - more attractive for consumers, thus eliminating the need for disposable ones. Yet, he now knows that developing a great circular product is not always enough to create real impact. At least not at first.
“When we started, we thought that there would be a demand for sustainable headphones. We were fully focused on the product and making it green, and when we launched it, we realized that there was no demand for it. I see other startups make the same mistake,” he says. “The way to be sustainable is to have scalable impact and for that you need to focus on market demands and the financial aspect. You can’t do everything at once, so you need to pick your battles.
Jaap van Dokkum, in charge of Safe & Sustainable Manufacturing at The Blender, the local factory of innocent drinks, knows what it takes to lead a project with a green mission.
“For us, the environment has always been the core, but to be really sustainable, you need to make money. The financial aspect is what we put in the balance. We are building our first own factory so we can increase our revenues, keep growing and keep reinvesting in sustainability.”
In other words, there has always been a trade-off between the environmental and the financial aspect. With their own factory, innocent drinks can make sure that this trade-off is ever-smaller as they become a part of the supply chain.
“With the factory, we want to get closer to our original promise of sustainability. We can reduce a lot of road miles and take control of the processes that are currently done by other factories. That way we can be in control of the total water, energy use, waste and our carbon footprint,” Jaap says.
Still, the overall consensus remains that developing and especially scaling a circular company costs a good amount of effort and money. And it takes plenty of time, too. y
Patience is a virtue – yet not everyone can afford it.
The City of Rotterdam is also actively involved in supporting innovative companies in their circular mission.
“We try to help startups together with various partners like BlueCity and CleanTech Delta,” says Peter Verschoor, Project Manager Economy at the City of Rotterdam. “For earlier-stage companies, there are subsidies available, while for scale-ups, there are investors like Innovation Quarter (IQ).”
As a city, Rotterdam participates in IQ and knows the potential it holds for helping entrepreneurs with business development and funding. IQ is a key partner for many innovative companies in the region and especially so, for circular startups and scale-ups.
“When we invest, we take an in-depth look at the technology and the financial aspect, but most of all we look at the team,” says Liduina Hammer, Head of Capital at IQ. So if you have a good team with an innovative idea, a strong business case and technology “that makes the world of tomorrow a little more beautiful”, as Liduina would say, then IQ may be just the right partner.
Perhaps the key selling point of IQ, next to their knowledge and expertise, is the fact that they can be a partner for the long run.
“Investing in circular startups brings certain difficulties,” Liduina says. “Because developing a circular technology takes a lot of time, these companies need patient capital. We are a patient investor and we can be a partner for the long run.”
DAB, Delft Advanced Biorenewables, is one of those companies that have required a longer period of time to develop and establish their technology. As a spin-out of the TU Delft, they have been funded by IQ and can attest to them being a patient investor.
“Especially when it comes down to technologies, they take a long time to mature,” says Eric van der Meer, CEO of DAB. “That stage is all pre-revenues and most investors find this difficult.” IQ has been there to support their development as they enter the market.
The technology that DAB aims to improve the productivity of fermentation processes and is essentially “an enabler for the biobased economy,” Eric says. “Through fermentation, almost all chemical compounds can be made. Synthetic biology can manipulate microbes to make chemicals in one go in a fermentative process, and DAB is an enabler of that process.”
Fermentation, however, is expensive. The technology that DAB has developed can intensify the fermentation process and lower the cost by up to 50%. The potential is clearly there, as the company recently doubled its expansion funding and is getting ready for a Series A round in 2022. The next steps for Eric and his team include finishing their demonstration plant and showing that their technology works for commercial applications.
“Our challenge is to reach maturity,” Eric says. “We need to be successful to bring down the cost of the biobased economy by up to 50%.” With the right partners, however, that should be more than possible.
IQ is one of those partners and key players, and there is a need for more of them in the local ecosystem. Liduina believes “there is also a need for more success stories that can raise the profile of our area in this field and inspire more entrepreneurs to engage in the circular economy.”