Recent research published in Journal of Cleaner Production shows that circular economy (CE) business models are in demand, but many enterprises and their associates don’t know enough to get started.

Conducted by Rochester Institute of Technology (RIT) Professors Clyde Eiríkur Hull, management professor in Saunders College of Business, and Eric Williams, sustainability professor in Golisano Institute for Sustainability, and Sherwyn Millette of the College of Science, Technology and Applied Arts of Trinidad and Tobago, the study focused on pinpointing the challenges and opportunities involved in the development of circular economy incubators.

The reasons for participating in a circular economy are clear: reducing the strain on the environment while innovating, retaining competitiveness, and maintaining or increasing profits. However, these benefits may not seem so evident for interested parties.

According to Hull, Millette, and Williams, “...many stakeholders do not fully understand circular-economy strategies and opportunities, emphasizing traditional waste management approaches such as recycling over value-added conversion of waste…entrepreneurs tend not to recognize the financial case for circular economy; a prerequisite to their motivation to participate in incubation.”

They suggest that a lack of education about how CEs work is the main factor keeping interested parties away. “Circular economy opportunities to disrupt linear economy business models with new ventures can be profitable for those who pursue them,” said Hull. “It’s a matter of connecting the right people with the right information. This is where business incubators can make a difference for CE.”

In an attempt to fill this knowledge gap and support CE projects, the REMADE Institute, a $140 million public-private partnership established by the U.S. Department of Energy, was formed. The institute’s mission is to lead the transition to a Circular Economy in the U.S. by bringing together industry innovators, academic researchers, and national labs.

“In my experience, collaboration is critical to the success of any innovative endeavor, and that includes circular economy incubators,” said Nabil Nasr, CEO of the REMADE Institute, “Entrepreneurs and researchers, working together with the financial, technical, and legislative support of governmental entities and other stakeholders, can be a powerful combination. Such collaborations can address the world’s most pressing sustainability issues, combating climate change, creating jobs, and accelerating our much-needed transformation to a global Circular Economy.”

Hull, Millette, and Williams suspect that if the knowledge gap is filled by organizations like the REMADE Institute, then circular economy incubators would seem far more compelling to interested parties. They found that, “circular-economy incubators would help entrepreneurs find and pursue circular-economy opportunities.” One co-founder of an entrepreneurial enterprise who participated in the study remarked, “We would really need someone to champion the project and lead us, to guide us through. We wouldn’t have a clue how to start.” While REMADE is not an incubator, they “help people find and exploit CE opportunities very well,” according to Hull.

Some of those opportunities can be found in developing countries. Hull, Millette, and Williams’ research was based in the nation of Trinidad and Tobago, and according to Hull, it brought into focus the potential these nations have for maintaining a circular economy. “If we ignore developing countries as we plan for the future, our plans will inevitably fail.”

There are already some incubators willing to develop CE based projects. RIT’s Venture Creations incubator guides entrepreneurs through the startup process with one-on-one coaching and has already successfully developed a CE-based business: Leep Foods.

Leep Foods is an organic and soil regenerative farm that grows several species of mushrooms on American hardwoods. This is done in contrast to the traditional method of growing mushrooms in manure.

“RIT's Venture Creations incubator has helped our company by being a connector to other RIT research faculty, laboratory resources, and companies active in the above technology areas,” said co-founder Chris Carte. “Leep Foods is participating in the circular economy in a few different ways:”

  1. “We up-cycle forest industry woody biomass residues that we purchase in the form of fuel pellets for pellet-fired wood stoves into delicious mushrooms.”
  2. “The slipstream produced from fruit-body mushroom production is called spent mushroom substrate (SMS). Empire Medicinals delivers this valuable slipstream to organic farmers and composters who use this material as a soil amendment and as a catalyst for greatly accelerating the composting of organic wastes. This also avoids disposal expenses.”
  3. “We are currently working with RIT, FLCC, and Cornell on manufacturing process development for the upcycling of various NYS dairy industry slipstreams, such as Greek yogurt acid whey, milk permeate, and cheese whey, to be used as the sole carbon source for the production of mushroom mycelium under submerged fermentation conditions using industry-standard stir tank bioreactor (STR) technology. With tens of millions of gallons of problematic lactose-rich NYS dairy industry slipstreams produced annually each year, the company is actively and aggressively pursuing the capture and upcycling of these abundant feedstocks for use in producing culinary and medicinal mushroom mycelium and secondary metabolites. Currently, NYS dairy industry producers pay farms and anaerobic digester operators tip fees and handling costs to receive and dispose of these high BOD/COD slipstreams.”

The development of Leep Foods through RIT’s Venture Creations incubator serves as a prime example of circular economy incubation done right: Taking an emerging company utilizing a CE business model and connecting them with investors, academics, and other interested parties. “The CE opportunities are out there,” said Hull, “but we need entrepreneurs to step up and take the ones that established companies aren’t able or willing to pursue.” “With incubators helping entrepreneurs get the information they need and network with necessary partners, we could see a big shift from linear to circular economies.”

This piece was written by Ed Brydalski, Communications Writer, Saunders Marketing and Communications.