How can we scale circular innovations in the construction sector?

The Circular Economy means reducing waste, prolonging use, recycling and upcycling. Circularity in construction consists of implementing circularity from the start in any project, and at every stage in the life cycle of a built object: raw materials, design and production, use optimisation, reuse, recycle. This provides a very rich spectrum of opportunities for ventures with innovative solutions.

At the moment, the focus of most ventures is on “design and production”, i.e., constructing new buildings with circular materials and for longevity, as well as on “use optimisation”, i.e., maintaining and adapting the building for continued, optimal use. We found relatively few examples of ventures with innovative solutions for recycling and reusing construction materials. Currently, most ventures are selling a product, but the trend leans towards more “Product-as-a-Service” models.

The number of start-ups that are active within the real estate construction sector is relatively small (about 3% of the total), with these numbers decreasing even further when we delve into the circular economy: we found just 28 firms active in circularity in construction in the Netherlands in the scale-up phase.

Scaling a venture is difficult in general. Only about a quarter of those firms that expand beyond 10 employees also manage to expand beyond 50 employees.

At the same time, it is not more difficult to scale within real estate construction or in circularity than other sectors. In other words, it’s hard, but not excessively so. Simultaneously, every sector has its unique characteristics that present scaling with specific difficulties. The construction sector is challenging because of its complex collaboration structures, long sales cycles, and local-for-local nature, which makes it difficult to scale internationally. Adopting circularity in construction is challenging due to the lack of cost-competitiveness for reused materials, few standards, and a lack of willingness to pay premium rates, plus, in many cases, buildings are already built to last.

Similar to animals adapting to a harsh environment, successful scale-ups in circular construction are perfectly equipped to overcome their challenges:

• The management teams are persuasive storytellers
• They ensure their circular solution has an attractive business case for the customer
• They address the tenants’ needs upfront
• They are gifted collaborators, capable in navigating the complexity of the value chain
• They are adaptive and opportunistic

These are appealing characteristics to be associated with. We hope that the many actors in the real estate sector seek out these scale-ups to partner with, invest in and support. After all, it is collaboration that defines this sector.

Read the full handbook below to learn more about how to pave the way for circular construction innovations at scale.