Circularity Capital has closed a second round at 215 million euros, far exceeding its first round of 60 million back in 2018. And circularity capital is not alone. Closed Loop partners, circular investment, circulate capital, along with the circularity european growth fund, among others, are emerging to expand the overall market for circular economy products and services. Venture capital is positioned to grow and expand circularity both as a fundamental approach to addressing the IPCC needs, global net zero goals, and ensure feasible business activities to allow for fiscally sustainable projects.

But as venture capital and public investments grow, we need to have a clearer conversation on which kind of circular future we want to build and which kinds of firms growing and scaling now will help to build those different futures. Within the IPCC report, circular researchers and analysts noted a clear alignment between the need for a circular transition and achieving a livable future under climate change. We cannot merely offset, we need to change the productive structure of our economies to reduce our material extraction, improving how materials flow in the economy.

From the policy and institutional investment side, the core focus has been on the end stage, material reuse and waste to energy - the need to build and expand the kind of recycling infrastructure available in societies. But from a circular perspective, this is the other side of the coin for what a healthy, circular society is minimising. We should want less material extraction and less recycling. We should want more reuse, more refurbishment, more repair, more sharing, renting, product as service; simply, we need more recirculation.

But better than just adding “more” of these areas, we want them to be smarter, we want the processes by which societies transition to easier sharing and repair to be data-driven, accessible, and efficient.  Which kinds of early growth firms are invested in and scale will have downstream impacts on how a society tries to transition and choose among different kinds of circular models. The even more brutal reality here is, even the academic community is unclear about how many kinds of circular economy models exist.

Circularity Capital's early investments are positioned on this track, focusing on platforms improving how goods and products flow in an economy, such as in ZigZag. This platform push is equally positioned on changing the circulation and loop creation for goods in an economy, with firms such as Green circle, backmarket, and grover capturing public attention.

A recycling heavy investment portfolio for a country will produce different kinds of industrial and economic incentives than a repair and refurbishment focus. Naturally, a circular economy needs all parts of this division, but the reality is that different cities, regions, and countries will have different mixes based on what kinds of materials are available, what kind of infrastructure they produce, and what kind of product-service mix they prefer.

Terracycle’s platform experiment in durable packaging is equally positioned on a precision consumption model, where it's not just about the “milkman model 2.0” in how people bring pre-packaged items together and pick them up but the ability to understand precisely how much you consume and create a new product mix to minimise wasted products. The success of terracycle is not necessarily in the products itself, but in the early recognition of co-opetition as a key model and the recognition that major consumer packaging firms recognize the need for shared infrastructure and shared market creation. Grover’s subscription model is positioned in how legal and digital movements position ownership. Backmarket’s used purchasing model relies on how the right to repair movement grows. Circularity is an early space of exploring different kinds of ownership and exchange models, different kinds of ways of being enabled by digitalization and data-driven approaches.

The legal and political uncertainty will be hard to resolve - so where entrepreneurial and investor attention needs to focus is on improving the clarity of which kind of portfolio of material flows, products, and services in a given economy help to create an inclusive, green, sustainable future? Intermediary platform investments are likely key for sure, but the overall conversation extends to which kind of circular infrastructure and indeed public infrastructure helps to facilitate different kinds of economies. An easily circulatable durable packaging will look entirely different depending on whether the cleaning and distribution infrastructure is centralised or decentralised, whether the decentralised model is community owned or embedded in warehouses outside of the city.

These questions tend to be realised in retrospect for innovation and technological development, from biogas projects to wind and solar power investments. But unlike green energy systems, circularity relies on a number of cooperative actors with a wider diversity of outputs and inputs - there is no such thing as a successful disembedded circular product, there are only different kinds of product-system relationships if a firm wants to achieve success for cradle to cradle, for both introducing new circular products into the world (such as circular q-tips) and ensuring they are not adding to later waste.

We need an open conversation on how these venture firms understand different kinds of circular futures, how the firms they are investing in understand and are positioned across these futures. Because ultimately this is around what kind of local economic structures and systems a given community wants and needs, and which kind of infrastructure allows for different circular models to emerge and succeed. Platforms will be the earliest success cases, but this needs to position an open conversation on what role platforms play in enabling and inclusive economic futures.