Challenges of start-ups developing circular business models

Sammanfattning: There is an increasing interest towards the subject of circular start-ups (CSUs), which are start-ups developing circular business models (CBMs). As start-ups, these CSUs encounters common challenges due to being a start-up while simultaneously encountering the challenges of implementing CBMs. While many barriers in developing CBMs have been identified in previous studies, these are barriers generally encountered by established companies and there is a knowledge gap regarding the challenges by start-ups developing CBMs. The objective of thisstudy is to analyse the challenges faced by CSUs as well as providing suitable recommendations to overcome these challenges. The study was carried out by semi-structured interviews with 27 CSUsfollowed by qualitative analysis. Results show that nearly all CSUs encounter market challenges, specifically in developing the market for circular products and/or services due to lacking consumerawareness towards sustainability issues and circular economy. Another market challenge is related to developing customers’ trust as well as loyalty towards the CSUs and this is normally encountered by platform-based CSUs. Some challenges are encountered by certain types of CBMs, such as supply chain challenge for access/performance model and policy challenges for extension of resource value model. Most challenges are caused due to developing CBM, but the status of being a start-up may also limit the influence of CSUs in the market. To overcome these challenges,supports from various stakeholders are crucial. One recommendation is for the government to update the current regulation and policy to support circular economy (CE) such as redefining waste categorisation and developing policy for product reuse. It is also suggested to develop CE-focused incubators through collaboration between government, academics, private industries, entrepreneurs/start-ups, incubator management, and Non-Governmental Organisations (NGOs).This type of incubators can help circular start-ups in identifying opportunities from material flow as well as developing products and/or services that fulfil customer needs. Collaboration with NGOs working in sustainability and environmental issues is also recommended to reach more customers while increasing consumers’ awareness and contributing to charitable causes. To shift from linear economy to CE, human resources with the suitable skills are highly required and this should be supported by a better educational system that enables workers to easily gain the skills as well as knowledge. Therefore, it is recommended for companies to develop a skill-based system and to rethink organisation as well as talent management.