ImpactCity entrepreneur in the spotlight: Circularise
February 9, 2023
Circularise enables supply chain transparency, a critical factor in a circular economy
One of the biggest hurdles in the transformation toward a circular economy is the lack of transparency in often globally stretching supply chains. It restricts manufacturers’ sustainability efforts and makes it very difficult to make verifiable sustainability claims. Furthermore, it makes the reuse, recycling, or upcycling of products at the end of their life inefficient and unprofitable, if not impossible. The Hague-based Circularise identified this problem and decided to step forward and build software solutions that help bring transparency to supply chains. Their solutions bring a circular economy at scale a large step closer to reality and are gaining traction among the world’s largest brands. A recent capital injection of €11 million will accelerate their growth and positive impact on our planet even further.
The Circularise journey began after the company’s founders Meshba Shabur and Jordi de Vos visited a number of recyclers in the Netherlands, only to discover that many of the resources we send there end up being either incinerated or dumped on landfills. They also found that the reason for this is that recyclers don’t know what’s inside all these products and at which quality and quantity. After this revelation, Circularise was founded in 2016 and was soon selected to participate in the reputable YES!Delft incubator programme. In 2018 they were ready to welcome their first marketing hire, Igor Konstantinov, who is now heading the marketing team. He knows everything about Circularise’s products and entrepreneurial journey and has strong ideas for building a successful business.
Transparency with a digital product passport
Circularise brings transparency to supply chains by providing a digital product passport for materials, parts, and products. The passport contains information critical for recycling, such as origin, certifications, portion of recycled materials, quality and quantity of the product’s compounds, etcetera. The passport is then stored on a blockchain to safeguard its validity. Circularise works with customers across the supply chain, beginning with the oil producers and moving up to plastic resin producers, component manufacturers, and at the end of the line are the brand owners and original equipment manufacturers (OEMs), mainly in the electronics and automotive industry.
Circularise intentionally started at the bottom of the supply chain in order to empower these customers to take charge of which data they share, e.g. certificates and compliance data, while keeping competitive information undisclosed. It achieves this with its patent-pending Smart Questioning technology, which allows suppliers to be in control of which data they want to share. As these segments started to use Circularise’s system, companies upstream of the supply chain were added to include component manufacturers and OEMs.
Image: Unlocking opportunities and gaining supply chain traceability with digital product passports as demonstrated in cir.cu, the digital platform used by Circularise.
Surviving the early startup stages
Their participation in the YES!Delft programme was instrumental to the startup in its early days and helped the team explore different business frameworks. “It is where we learned about the importance of finding paying customers at an early stage. That is also the best advice I can give to current early startups,” Igor states. That process is not only about generating cash flow. Equally important is that it helps validate your proposition and product, define adequate pricing schemes, identify potential improvements, and sharpen your strategic growth plans. “In our case, this was arguably the most challenging time for our business, because there was no specific demand to work with digital product passports. Also, our focus on the chemicals and plastics industry, which is by nature a very conservative industry, didn’t make life easier for us,” Igor explains.
“The Hague’s heritage as the international city of peace and justice and the city’s investments in the impact business ecosystem, has also attracted impact investors such as 4Impact, which is one of the investors we selected to partner with in our latest investment round.”
Scaling up with funding
A break-through came after an EU-grant awarded to Circularise in 2019 allowed the company to scale just enough to gain more traction in the industry and advance their product into a proper well-functioning solution. In 2019-2020 the team doubled from 6 to 12 employees, which propelled the company into maturity and shaped the company’s operational tactics. Like virtually all businesses, the Covid-19 pandemic hit Circularise with an unforeseen setback. It was at this time, that Circularise won 1st prize at Get In the Ring – Impact, a startup competition organised by ImpactCity partner Unknown Group during ImpactFest 2020. This prize helped the company bridge the difficult times during the pandemic. It helped Circularise prepare to come back stronger, building up to its new investment round in 2022.
Of the €11 million granted in late 2022, 4 million consisted of grants. “Participation in EU-subsidised projects generates more benefits than just the cash. They typically require international collaboration with partners from other EU countries, which provides significant benefits. It helps grow your network as a company, it allows participation in large projects you would otherwise never have access to and it helps expand your knowledge.” But participation in these projects is also accompanied with responsibilities. As a result, Circularise has a full-time employee dedicated to managing these projects.
First build the foundation, then accelerate growth
Igor also emphasises the importance of thinking big from the get-go because it helps to make well-considered decisions about the product and business development roadmap. “In our case, the strong focus on our vision of a circular economy has helped us build our customer base strategically. It helped us realise that our products gain value as more parties, especially at the lower end of the value chain, are using our system. In other words, the larger and more diverse our customer base among suppliers, the easier it will get to attract new brands and OEMs. This is also called the network effect. That insight has been very instructive to our commercial tactics, and is why our current growth is a solid fundament for accelerated growth in the future,” Igor elaborates.
Meeting with potential investors as a full-time job
Doing this strategic work also helps in the preparations for further upscaling of the business. “When you prepare for securing investments, it is important to have a clear understanding of what you want for your business. You need to do the work,” says Igor. “Not only to be able to sell your proposition but also to be able to select investors,” he continues. Every investor will have different values, expectations, and offerings. “We met with several hundred investors before making a choice. It was a full-time job for one of our founders for months, but that was necessary in order to make a well-founded decision that we feel confident will secure the business’ growth in the future.”
Other advice Igor gives is to try to delay the need for venture capital until you are ready to grow. So first make sure to generate and operate on revenue from paying customers. This brings you to a position where you can say no to a potential investor and continue to search for a perfect fit. Also, Igor suggests allowing only a small amount of opinions and decision-makers involved in the process, because involving too many opinions can paralyse decision-making.
“We are very proud to see impact companies such as Circularise grow here, embedded in the impact business community. As these companies grow, so does their positive impact.”
Profiting from The Hague’s business ecosystem
“We are very proud to see impact companies such as Circularise grow here, embedded in the impact business community,” says Coos Santing, Programme Manager at Impact City for the municipality of The Hague. “As these companies grow, so does their positive impact. In this case they are bringing a circular economy at a global scale a significant step further,” he continues, “that makes me hopeful and excited about the future.”
Circularise is based at The Hague Tech, a dynamic startup community at the economic centre of The Hague, and also home to YES!Delft and impact incubator World Startup. YES!Delft was attracted to The Hague in early 2019, as part of ImpactCity’s efforts to strengthen its business ecosystem. “Being part of that community, which is very international, diverse and ambitious, is inspiring and gives us new ideas and insights. It also connects us to new people with knowledge and experience we may not even know we needed, so that access to talent is invaluable to us as well. And last but not least, The Hague’s heritage as the international city of peace and justice and the city’s investments in the impact business ecosystem, has also attracted impact investors such as 4Impact, which is one of the investors we selected to partner with in our latest investment round,” Igor concludes.