Investors have been pouring money into the UK's burgeoning circular economy, with estimates of £1.3 billion of capital having been invested in the sector in 2022, according to research from BDO LLP.
The consultancy reported that venture capital investors accounted for 62 per cent of UK circular economy deals last year, with an average cheque size of £4.9m. It also found that industrial and manufacturing was the most active sector for circular economy investment, making up 36 per cent of deal volumes.
BDO's Rory McPherson noted that the shift from linear to circular business models based on reuse, recycling and keeping materials within the value chain was becoming more attractive to investors.
In addition, they found that 27 per cent of deals were related to circular inputs, while 21 per cent were linked to circular design and 16 per cent to materials recovery and recycling.
Todd Mills, assistant director at BDO, said circular economy entrepreneurs were now "much sought-after". He emphasized that entrepreneurs of the circular economy must be able to explain a convincing business expansion strategy, specifying the potential target audience and why customers or organizations would switch to their product or service over the existing linear ones or other new circular products. He also added that investors must recognise that circular economy entrepreneurs are focused on both profit and sustainability.