In a former tropical swimming pool in the middle of Rotterdam (Tropicana, for connoisseurs), 50 young companies are now building on the circular economy. BlueCity was founded seven years ago based on the frustration that circular economy was mainly talked about and not much was done.
‘We said ‘we’ll do it ourselves’, bought that swimming pool and just started,’ says Biesheuvel. ‘The story of scarcity of raw materials should have a lot of attention in the middle of the city.’
Also read: How the once gray Rotterdam grew into a startup metropolis
The company formally started in 2015, with private money and from the mission of accelerating circular entrepreneurship and offering scalable alternatives. ‘I strongly believe in entrepreneurship as a way to change something. You fill a need that you must test against the market. They pay you for the value you provide.’
‘Our investor sums it up aptly: ‘Entrepreneurs are a group that structurally overestimate themselves and underestimate the task ahead.’ This is exactly what needs to happen in the circular economy, and we have done that with BlueCity. And that’s a good thing, otherwise we would never have started. We are now also a fire, several burglaries and two more years of corona. All things that are not in your business plan. You react to that and you continue’.
Mealworm nachos for bankers
It was a bit of a quest to find out how to combine system switching and making money. Biesheuvel reports that serving mealworm nachos and hyper-locally produced syrups at an event for bankers five years ago was a step too far. It requires a lot of explaining and could not be done profitably with the small team. In short, too early. Standard vegetarian and local catering is now normal, as is local and seasonal.
In addition to assisting startups, BlueCity also works actively with the existing market. For example, the company launched the hospitality industry with Het Nieuwe Nassen: an SME program in which around fifty Rotterdam restaurants participate. ‘Very constructive, practical collaboration with young innovative entrepreneurs and chefs. Anything but offensive. That way, you get the system one step further every time.’
This is how Sabine Biesheuvel wants to change the system:
- Using entrepreneurship to make a difference. You fill a need that you must test against the market.
- Constructive, practical collaboration with young innovative entrepreneurs to take the system one step further every time.
- Governing chains as a whole in the transition to circularity, because the answer usually lies in and spreads throughout the chain.
- While existing residual flows are mainly used today, there are opportunities to proactively use new, better raw materials. For example, food crops that are more resistant to heat and the soil.
- Circulars touch on many themes, such as biodiversity, water quality and soil restoration. A story that must be conveyed in doses. Otherwise, you immediately lose an average entrepreneur.
BlueCity focuses on different aspects in a business-like way. For example, the building is owned and companies rent offices there at a commercial rate. In addition, there are rooms for rent, where around three hundred events are held each year. ‘We always check which companies come by and link them as much as possible to our entrepreneurs or others from our network.’
There is also its own Lab, aimed at product development. ‘We do all the experiments there. From leather from green waste streams from gardeners to dyes from mushrooms.’
Several proof of concepts have since been scaled up to companies, she adds. With which she enters another initiative: Circular Factory, which focuses on the next step towards large-scale production, or a demo factory together with co-founder Tekkoo and partners such as Invest NL and Renewi.
BlueCity helps build the chain
More recently, the business development arm of the organization has also grown. The business unit that guides the market participants in their chains on how they can develop towards circularity.
Because the answer lies in and spreads throughout the chain, says Biesheuvel. Different people are involved in this and it is rarely due to the technical feasibility of innovations. “There is already a bio-based coating for cheeses, but if you want to use it, the cheeses in storage must be turned more often, and it costs a full year’s work extra. And therefore money.’
Where necessary and appropriate, entrepreneurs from BlueCity or the wider network are ‘pricked in’. ‘In this way we build the chain around it and we change the whole system.’
One of the principles is that financial sustainability and impact is like learning to walk on two legs: you need both. And then you have to test them both, says Biesheuvel. ‘No matter how idealistic you can be, if it’s not financially viable, it’s not scalable.’
‘We ask entrepreneurs to create a very clear picture of what they want to change systemically. That you must constantly keep an eye on the market and adapt to it is a very healthy development in relation to idealism.’
Breaking through the chicken-egg problem of funding
A recurring challenge is that circular entrepreneurs often work from residual flows. Which means they have to stabilize their material supply – the raw material – and get the customer on board. ‘You often see entrepreneurs who fix the chain, at the same time as they also have to build up a business with customers.’
Another challenge is that there is usually a large capital requirement because factories have to be built over time. Which in turn means that the demand for knowledge and skills (and thus team composition) is also changing significantly.
In the beginning, it is primarily about material design. But when you scale up, the focus is on production processes and it’s a completely different game to play. ‘It’s about things like energy demand and consistent supply, quality and volume of your raw material and later your product.’
Another factor is that scaling up requires funding, and that funding in turn requires customers – and customers want to see that you can deliver on a large scale. This is what BlueCity is trying to break through with the Circular Factory program by helping young companies get a handle on data from the pilot phase as tightly as possible, so that financiers see it as risk reduction. ‘That’s why we also help companies with facility design: what does your factory look like, what machines do you need, how do you work as sustainably as possible? And what is your factory’s economic model?’
The definition of circular is different
From the beginning starting and arriving at a circular model can still be called smart. However, there is also a major challenge for the existing industry. BlueCity only works with collectives, i.e. with an entire industry or chains, not individual companies. Such as the Hotel Neutraal program where sixteen Rotterdam hotels work together. ‘It works well to link companies together, and there are many common challenges (and solutions). Many answers often come from the industry itself.’
What circular means can also be explained in several ways and is different from sector, chain or product. For one it is repair, for another it means modular design, and for another it is the choice of materials.
Furthermore, circular does not always have to be sustainable. “For example, a product’s energy performance when recycled may be poor. Or sometimes a particular recycling process is so intensive that you negate your influence and you have to ask yourself what problem you are solving.’
Increasing the quality of circular products
Looking to the future, the goal is to establish twenty demo factories from the Circular Factory track in collaboration with Tekkoo, owned by Lindy Hensen. ‘We get a lot of attention, but you have to be careful not to confuse attention with success. It’s about scaling up enough companies. Then we will be successful as BlueCity.’
At the same time, Biesheuvel wants to better support startups already in the pilot phase. For example, by joining design agencies to take the quality of circular products to the next level. ‘Products must not only be different, but also better. As a whole, the circular economy really needs to rise above the level of recycled flower pots and lampshades.’
Plus: where existing residual streams are mainly used today, there are opportunities to proactively use new, better raw materials. Biesheuvel mentions food crops that are more resistant to heat and the soil. By introducing them into the chain and ensuring that they are treated, a sector becomes more future-proof.
It is necessary to bring back the manufacturing industry
Future-proofing is a central theme for Biesheuvel and should receive much more attention in the market. “Many investors do not yet understand the risks their companies run due to the future scarcity of commodities in their portfolio.”
The road towards a circular economy is being pushed along various crises, says Biesheuvel. It is not a pleasant picture, she admits, but it is as realistic as it can now be assessed.
“Nationally, it is desirable that a large part of the manufacturing industry returns, so that we can form short chains. Just as we need a raw material and food strategy. Even more than a goal that we want to be 50 percent circular by 2050.’
Bottom line, she believes that the circular economy is about a healthy relationship with our ecosystems. This affects all themes such as biodiversity, water quality and soil restoration. A story that must be conveyed in doses. ‘Otherwise you immediately lose an average entrepreneur.’