Circularity Capital - The Asset’s influence on Funding

09/17/24 • 40 min

Investor perspectives on Impact & Finance

When is a business model considered circular? A fund with circularity in its name must answer this question.

Andrew Shannon, Partner at Circularity Partners, gives us her answer. A benchmark market method is used to examine the behaviour of the portfolio company's customers.

In addition, Andrew describes how the financing challenges of PaaS businesses can be overcome.

This episode is the sixth in the series PaaS Decoded, 16 conversations about the fine details of product-as-a-service.

People Andrew Shannon, Partner at Circularity Capital

Patrick Hypscher, Co-Founder of Green PO, Expert in Sustainable Business Models

Chapters 00:00 Intro 03:35 Circular Nature of PaaS 05:53 Benchmarking the circular against the linear model 07:30 Collecting Impact Data 12:38 Account for Rebound Effects 13:22 Screening companies for Circular Character First 15:48 (Not) Using Equity Money to Finance the Assets 20:12 Asset Based Funding 22:42 Subscription Based Funding 23:43 Explosion of Non-Bank Lenders 25:02 Financing early Growth 29:13 Longt Product Lifetime & Short Use Case 32:28 Lasting Products as Foundation 35:15 Rising demand 38:40 Get in Contact

About Circularity Capital, from website: Circularity Capital was founded as an independent investment manager in 2015, with a mission to deliver value for investors by supporting growth and innovation in the circular economy. We are a supportive hands-on investor and use our team’s specialist expertise and knowledge in the circular economy to support the businesses we back. Circularity’s investors comprise of pension funds, fund of funds, insurance companies and leading single family offices.

Further Links https://circularitycapital.com/

Transcript See the episode page for the transcript: https://circularity.fm/circularity-capital-the-assets-influence-on-funding/

Investor perspectives on Impact & Finance

When is a business model considered circular? A fund with circularity in its name must answer this question.

Andrew Shannon, Partner at Circularity Partners, gives us her answer. A benchmark market method is used to examine the behaviour of the portfolio company's customers.

In addition, Andrew describes how the financing challenges of PaaS businesses can be overcome.

This episode is the sixth in the series PaaS Decoded, 16 conversations about the fine details of product-as-a-service.

People Andrew Shannon, Partner at Circularity Capital

Patrick Hypscher, Co-Founder of Green PO, Expert in Sustainable Business Models

Further Links https://circularitycapital.com/

Transcript See the episode page for the transcript: https://circularity.fm/circularity-capital-the-assets-influence-on-funding/

Previous Episode

Commerzbank - Financing a PaaS Business

Where a bank can help

Description Funding the assets is a prominent challenge for PaaS businesses. Assets have to be prefinanced, as customers only pay a monthly few.

Generally, three partners can provide support: venture capital investors, banks, and strategic partners, such as manufacturers.

In this episode, Lennert van Mens provides a bank's perspective on a PaaS business, including the overall business model, the cashflow design and the value generation.

This episode is the fifth in the series PaaS Decoded, 16 conversations about the fine details of product-as-a-service.

People Lennert van Mens, Co-Lead ESG & Sustainable Finance Solutions Team, Commerzbank

Patrick Hypscher, Co-Founder of Green PO, Expert in Sustainable Business Models

Chapters 00:00 Intro 02:08 The right moment to contact a bank 07:25 The data a bank needs to assess the business 11:52 The specifics of circular businesses & leasing 22:05 Financing the assets 27:02 The PaaS valley of death 33:13 Cashflow design 36:45 Helpful financial instruments 39:41 The role of interest rates 43:42 The circular future is in B2B

About Commerzbank: Commerzbank is a prominent European banking institution based in Frankfurt am Main, Germany. Established in 1870, it is one of the oldest banks in Germany and operates as a public limited company (Aktiengesellschaft). The bank offers a comprehensive range of financial services to private, entrepreneurial, and corporate clients, making it a key player in the German banking sector.

Further Links: https://commerzbank.de/ https://neosfer.de/ https://impact-festival.earth

Transcript See episode page for the full transcript https://circularity.fm/commerzbank-financing-a-paas-business/

Next Episode

Circular X - Identifying and Mitigating Rebound Effects

Designing PaaS models for a positive impact

Description Do PaaS models reduce overall resource consumption? Enhancing circularity is one motivation for starting PaaS. But PaaS does not necessarily deliver on that promise. It requires monitoring consequences and benchmarking them with other behaviours.

In this episode, Ankita Das, PhD Researcher on Circular Business Models at Circular X at Maastricht University, explains the origin and character of rebound effects. She does not stop there but shares common mitigation strategies and ways to implement rebound thinking in the early design process of a business model.

This episode is the seventh in the series PaaS Decoded, 16 conversations about the fine details of product-as-a-service.

People Ankita Das, PhD Researcher on Circular Business Models, Circular X at Maastricht Universty Patrick Hypscher, Co-Founder of Green PO, Expert in Sustainable Business Models

Chapters 00:00 Intro 02:14 Definition of Rebound Effects & Backfiring 04:33 Extra or careless consumption 06:33 The difference between rebound effect and unintended consequences 09:44 PaaS-specific rebound effects 14:16 Measuring rebound effects 17:23 Making rebound effect scanning part of pilots 19:45 Common mitigation strategies 21:41 On rebounds caused by sufficiency & refuse strategies 23:26 Be aware the bad impacts before you start

About Circular X (from website): Circular X is a European Research Council (ERC) funded research project focused on experimentation with circular service business models. It will run from 2020-2025 and aims to support the acceleration of the business transition towards a Circular Economy through tools, methods and cases in collaboration with businesses, large and small.

Further Links: Jevons Paradox: https://en.wikipedia.org/wiki/Jevons_paradox

How do companies measure and forecast environmental impacts when experimenting with circular business models? https://www.sciencedirect.com/science/article/pii/S235255092100292X

The Circular Rebound Tool: A tool to move companies towards more sustainable circular business models https://cris.maastrichtuniversity.nl/en/publications/the-circular-rebound-tool-a-tool-to-move-companies-towards-more-s

Miro Template The Circular Rebound Tool https://miro.com/miroverse/the-circular-rebound-tool/

Homie pay per use https://www.homiepayperuse.com/

Circular X https://www.circularx.eu/

Transcript See the episode page for the transcript: Linkbeschreibung