Scaling Sustainable Business Models through Strategic Design
A Framework for Designing
Resilient & Sustainable Businesses
Location: Delft
Client: Delft University of Technology, NL
Sustainable Business Model Innovation (SBMI) is a strategic approach that complements the operations and values of organisations to help them integrate sustainability into their business models. However, sustainable businesses often face significant barriers when scaling their impacts, including resource constraints, operational inefficiencies, and stakeholder complexity. This project introduces the Sustainability Scale-Up Framework (SSF), a comprehensive tool designed to aid businesses to scale up while maintaining their commitment to environmental, social, and economic values. The SSF employs a vision-driven approach, integrating principles from strategic design and SBMI to address the scalability challenges. The SSF has been developed iteratively through an extensive literature review, qualitative interviews and a business case workshop to ensure its robustness and applicability. This research contributes to SBMI, scalability and strategic design literature by offering actionable insights for scaling SBMs, enhancing their capacity to achieve transformative impact. At the practical level, the findings underscore the SSF’s potential as a decision-making, communication, research and innovation tool for entrepreneurs, policymakers, and researchers. The SSF advances the literature on sustainable economic growth by aligning sustainability goals with scalable business strategies.
The Sustainability Scale-up Framework
Sustainability Scale-up Framework (SSF) is a conceptual framework that helps businesses transform their sustainable business models to be resilient and scalable using the principles of strategic design. It consists of four main layers: Vision, Value Propositions, Value Creation Mechanisms, and Impacts & Strategies. The complete report regarding the formulation of this framework can be accessed through this link.
This page elaborates on the definitions and key concepts and recommends considerations for each of its elements. These definitions are derived from a culmination of the insights gained from a series of literature reviews, qualitative interviews and a business case workshop.
The Vision element represents the desired state the sustainable startup wants the world to achieve.
The Social Value Propositions articulate the unique value the products or services of the sustainable startup provide to its beneficiaries.
The Environmental Value Propositions articulate the unique value the products or services of the sustainable startup provide to the environment.
The Economic Value Propositions articulate the unique value the products or services of the sustainable startup provide to the customers.
Value Creation Mechanisms are the fundamental processes and activities through which sustainable startups generate their value propositions.
Value Creation Mechanisms are the fundamental processes and activities through which sustainable startups generate their value propositions.
Value Creation Mechanisms are the fundamental processes and activities through which sustainable startups generate their value propositions.
Target markets refer to the specific group of consumers or organisations the sustainable startup aims to reach by scaling up.
Organisational governance refers to the structures, processes, and customs that determine how an organisation is directed, administered, and controlled.
Supply chain and production refer to the systems and processes that enable the sustainable startup to produce and deliver its offerings to its markets.
Impacts refer to the measurable outcomes that startups aim to achieve through scaling up.
Impacts refer to the measurable outcomes that startups aim to achieve through scaling up.
Impacts refer to the measurable outcomes that startups aim to achieve through scaling up.
Brand and Communication Strategy encompasses the development of a strong brand identity and the effective communication of that identity to the market.
Circularisation Strategy refers to the design and implementation of a BM that minimizes waste and maximizes the reuse and recycling of resources throughout the product life cycle.
A fundraising strategy is a plan that outlines how a sustainable startup will secure the financial resources it needs to scale up.
Vision
The Vision element represents the desired state the sustainable startup wants the world to achieve.
The vision serves as the guiding tool or framework for a startup. It encapsulates the long-term aspirations and the ultimate impact the startup aims to achieve. A well-articulated vision provides direction, inspires stakeholders, and helps maintain focus on the broader goals during the scale-up of a sustainable startup. In crafting a vision, while it is essential to be ambitious, ensuring it resonates with the team and aligns with the startup's values and purpose, it is also necessary to be achievable and tangible. The vision should be clear enough to guide decision making and flexible enough to adapt to changing circumstances. It is very important to incorporate the overall aspirations of the startups on all three fronts: the social, environmental and the economic. The model is compatible with the existing vision of the sustainable startup that wants to scale, but it recommends a structure that helps the startup make its vision more tangible. This structure is derived from the Vision in Product Design method developed by Hekkert & Dijk (2011), which helps provide a structure to the vision.
The Economic Value Propositions articulate the unique value the products or services of the sustainable startup provide to the customers.
TREND ANALYSIS
This refers to quantitative and qualitative techniques used to identify essential phenomenon or trends around the world. There are various techniques available in strategy literature such as PESTEL (Johnson et al., 2008) which can be used for this.
The Economic Value Propositions articulate the unique value the products or services of the sustainable startup provide to the customers.
CLUSTERING
(Environemnt, Social and Economic Trends)
The Model recommends classifying these themes into “Economical. Social and Economic” trends. Then patterns are to be found within these trends and these are clustered together to find interesting problem directions.
The Economic Value Propositions articulate the unique value the products or services of the sustainable startup provide to the customers.
Worldview
A worldview is a comprehensive perspective that shapes the future context for which sustainable startups design their offering. This worldview is built based on the clustering of the trends and the experiences of the startup.
The Economic Value Propositions articulate the unique value the products or services of the sustainable startup provide to the customers.
Vision
Based on the worldview, the vision statement can be created, which helps them to create a “desired state” of the world by changing the “desired behaviour’ of their target group or creating a ‘desired experience’ for them.
The recommended structure of the vision is as follows:
“We want {target group} to have {desired behaviour}/ {desired experience} by creating a world {desired state}.”
Examples of visions of some famous sustainable startups and companies:
“We want drivers to have an exhilarating, emission-free driving experience by creating a world where transportation is electric, sustainable, and accessible to all.” (Tesla)
“We want outdoor enthusiasts to have durable and ethical gear by creating a world where all clothing is produced with the smallest environmental footprint.” (Patagonia)
“We want meat lovers to have the taste and nutrition of meat by creating a world where protein is sourced sustainably without harming animals.” (Beyond Meat)
“We want smartphone users to have a long-lasting, repairable phone by creating a world where electronics are made with fair labour and minimal waste.” (Fairphone)
Value Propositions
The value propositions articulate the unique value the products or services of the sustainable startup provide to its customers, beneficiaries and the environment.
Value propositions are a promise of value to be delivered and a belief from the customer that their desired values will be experienced. For sustainable startups, a strong value proposition is crucial as it not only helps attract and retain customers by making clear the distinct benefits they offer, but also communicates the sustainable values they bring to their beneficiaries and the environment. It differentiates them in the market as it is essentially the reason why a customer would choose one product over another. These propositions are divided into three essential pillars in the model: social, environmental and economic value propositions. As the sustainable startups scale, the complexity of their sustainable solutions can increase, making it harder to communicate a clear and concise value proposition. These pillars are essential to create structure and clarity, and a holistic balance of these three is crucial for a successful scale-up strategy. The value tensions arise due to the conflict between these values is a major theme discussed both in the literature (Glinik et al., 2024) as well as in the qualitative interviews performed during this research. This model attempts to manage these tensions by connecting them to a common vision by asking this non-exhaustive set of questions for the different value propositions:
Social Value Proposition:
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How does the ‘desired behaviour’ improve community well-being?
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What social problems are we addressing through our ‘desired experience’?
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Which customer and beneficiary needs does our ‘desired state’ satisfy
Environmental Value Proposition:
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How does the ‘desired behaviour’ contribute to environmental conservation?
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In what ways does the ‘desired experience’ encourage eco-friendly habits?
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Which environmental needs does our ‘desired state’ satisfy?
Economic Value Proposition:
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How does the ‘desired behaviour’ drive economic growth or stability?
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What economic challenges are we solving through the ‘desired experience’?
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How will our actions contribute to the long-term financial well-being of our stakeholders?
By answering questions like these, sustainable startups can formulate specific values to embody their vision and hence aim to reduce the mutual value tensions while scaling up. Some examples of these values are:
Community Development:
These propositions aim to revitalise underdeveloped areas through infrastructure improvements, local business support, or community engagement, enhancing the quality of life for residents.
Sustainable Agriculture: Environmental-friendly farming techniques that ensure food security, support local economies, and protect natural resources, offering long-term benefits to society.
Zero-Waste Product Lines: Products designed to eliminate waste during production and after consumer use, promoting a circular economy and reducing landfill impact.
Eco-Friendly Packaging: Developing biodegradable or compostable packaging to replace traditional plastics, reducing environmental pollution and resource consumption.
Cost-saving:
Innovations that reduce production costs for businesses, such as energy-efficient machinery, which can lead to lower prices for consumers and higher margins for companies.
High Quality:
Offering higher quality at market prices ensures that the customers associate the startup with “value for money” and offerings that differentiate them from the competition
Value Creation Mechanisms
Value Creation Mechanisms are the fundamental processes and activities through which sustainable startup can generate their value propositions.
These mechanisms involve the development of unique products or services, enhancement of customer experiences, using environmental materials and innovation in financial and business models. This layer of the framework incorporates the internal infrastructure of the sustainable startup and helps to create coherency in the scale-up strategies. This layer is further divided into two parts. The first part is about the environmental, social and economic value creation, which essentially describes the product/service features, policies and financial infrastructure required to create the values promised in the value propositions. The second part of this layer consists of supplementary creation mechanisms that connect the elements of the first part with each other, namely Target Markets, Supply Chain & Production and Organisational Governance. These elements evaluate the existing infrastructure of the startup and find gaps to help them create resilient foundations to facilitate the scale-up. The model recommends a directional approach to derive its ‘Value Creations’ layer. The environmental, social and economic value creation mechanisms are derived from their respective value propositions. This set of questions helps in this process:
Social Value Creation Mechanisms:
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How do we influence people to adopt the ‘desirable behaviour’?
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How do we create the ‘desired experience’?
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What activities would help us to deliver our value propositions to our customers and beneficiaries?
Environmental Value Creation Mechanisms:
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What changes can we make to our product/service to make it more environmentally friendly?
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How do we create the ‘desired experience’ that encourages eco-friendly behaviour?
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What activities do we undertake to reduce our environmental footprint?
Economic Value Creation Mechanisms:
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What is our pricing strategy?
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How do we earn money from our sustainable initiatives?
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How can our business model sustain long-term profitability and growth?
These questions help startups identify different mechanisms that facilitate them to create their value propositions. Some examples of these mechanisms are:
Job Training for Marginalized Groups:
Providing skills development to the bottom of the pyramid could improve their economic status and create employment, which results in effective community development.
Health Awareness Campaigns: Educating the public about preventive healthcare, nutrition, and lifestyle choices can lead to a reduction in diseases and overall healthcare costs, enhancing community well-being.
Urban Green Spaces:
Creating parks and green rooftops in urban areas to improve air quality, provide recreational spaces, and support biodiversity.
Renewable Energy Adoption: Implementing solar, wind, or hydropower solutions contributes to reducing carbon emissions and dependence on fossil fuels, promoting a cleaner, more sustainable environment.
Microfinance Services:
Providing small loans to entrepreneurs in developing countries, enabling them to start or expand businesses, which can stimulate local economies and reduce poverty.
Subscription-Based Models: Offering products or services through a subscription model ensures a steady revenue stream for businesses and can provide consumers with cost-effective solutions
Target Markets
Target markets refer to the specific group of consumers or organisations the sustainable startup aims to reach by scaling up. This element is essential during the scale-up process, especially if the sustainable startup wants to create or increase demand for its offerings. Scaling up sustainable startups requires making essential considerations, some of which are explained below:
B2B customers: Businesses that are looking for sustainable solutions to reduce their environmental impact and enhance their social responsibility. These customers are motivated by the benefits of sustainability for their reputation, efficiency, cost savings, and compliance. They are also interested in the innovation and quality of the products or services offered by the sustainable startup. Some examples of B2B customers are green hotels, eco-friendly restaurants, and corporate offices that want to implement sustainability practices and policies.
B2C customers: Consumers who are conscious of the environmental and social implications of their purchasing decisions and are willing to pay a premium for sustainable products or services. These customers are driven by the values and beliefs that align with the sustainable startup's mission and vision. They are also attracted by the features and benefits of the products or services, such as durability, health, safety, and social impact. Some examples of B2C customers are organic food shoppers, fair trade clothing buyers, and renewable energy users.
Government entities: Public sector organisations that have policies and regulations to promote sustainability and support innovation in this field. These customers are influenced by the public interest and the social and environmental goals of their mandates. They are also looking for reliable and effective solutions that can help them achieve their objectives and improve their performance. Some examples of government entities are environmental agencies, urban planning departments, and development cooperation agencies.
NGOs and social enterprises: Non-governmental organisations and social enterprises that share the same vision and values as the sustainable startup and can benefit from its offerings or collaborate with it on joint projects or campaigns. These customers are inspired by the social and environmental impact of the sustainable startup and its products or services. They are also seeking opportunities to enhance their reach, capacity, and sustainability. Some examples of NGOs and social enterprises are environmental advocacy groups, social innovation hubs, and community-based organizations.
International markets: Markets in different countries or regions that have a high demand and potential for sustainable products or services and where the sustainable startup can leverage its competitive advantage and differentiation. These customers are influenced by the local needs, preferences, and trends of their markets, as well as the global awareness and demand for sustainability. They are also looking for solutions that can address their specific challenges and opportunities, such as resource scarcity, climate change, and social inequality. Some examples of international markets are emerging economies, developing countries, and regional blocs.
Production & Supply Chain
Supply chain and production refer to the systems and processes that enable the sustainable startup to produce and deliver its offerings to its markets. This element is pivotal for scaling up, especially for a startup that has created substantial demand and faces a bottleneck on the supply side. Some essential considerations for this element are mentioned here:
Lean manufacturing: Lean manufacturing is a set of practices that aim to eliminate waste, improve quality, and increase efficiency in the production process. By applying lean principles, startups can reduce costs, increase customer satisfaction, and enhance their competitive advantage.
Automation & Digitization of production: Automation and digitization can help startups streamline their production process, reduce human errors, and increase productivity and accuracy. By using technologies such as robotics, artificial intelligence, and cloud computing, startups can optimize their operations and logistics, improve their data management, and enhance their innovation capabilities.
Strategic partnerships and alliances: Partnerships and alliances with suppliers and distributors can help startups access new markets, resources, and capabilities, as well as share risks and costs. By collaborating with suppliers, distributors, customers, or other stakeholders, startups can leverage their complementary strengths, increase their bargaining power, and create synergies and economies of scale.
Supplier diversification: Diversification can help startups reduce their dependence on a single production process or supplier, improving their revenue streams and mitigating the risks of market fluctuations and customer preferences. By having a variety of suppliers and catering to different offerings in their portfolio, startups can expand their customer base, mitigate supply chain disruptions and effectively overcome the supply bottleneck for their market demands.
Ethical sourcing: Ethical sourcing is the practice of ensuring that the materials, products, and services used in the production process are obtained from suppliers that respect human rights, labour standards, environmental protection, and fair-trade practices. It can help startups build trust and loyalty with their customers, employees, partners, and communities, as well as mitigate the risks of reputational damage, legal sanctions, and supply chain disruptions. By ethical sourcing, startups can also create a positive social impact and contribute to sustainable development goals.
Organisational Governance:
Organisational governance refers to the structures, processes, and customs that determine how an organisation is directed, administered, and controlled. It is crucial for startups to form resilient organisational structures while scaling to ensure that all their functions run as intended. Good governance ensures that the startup's activities align with its values and vision and that resources are managed responsibly for the benefit of all stakeholders. Effective governance involves a balance between enabling the organisation to pursue its mission and ensuring it does so responsibly and sustainably. It's about steering the organisation towards achieving its goals while also meeting the expectations of stakeholders and complying with legal and regulatory requirements. Some essential considerations in this element are:
Talent Acquisition: Sustainable startups need to attract and retain employees who have the skills, knowledge and passion to drive their mission and vision in order to scale up. Proficient talent can help startups innovate, improve efficiency, solve problems and create value for customers and stakeholders. Hiring proficient talent also means ensuring a good fit between the candidates and the startup's culture, values and goals.
Organisational Structure: A company structure defines how a startup organises its functions, roles and responsibilities. A clear and effective company structure can facilitate communication, coordination and collaboration among employees, teams and departments. It enables scalability, flexibility and adaptability as the startup grows and faces new challenges and opportunities. Creating a company structure involves considering factors such as the startup's size, stage, strategy, objectives and resources.
Organisational Guidelines: Guidelines for operations refer to the policies, procedures and standards that regulate how a startup conducts its business activities. These guidelines can help ensure quality, consistency, compliance and accountability across the startup's operations when they scale. They can also support the startup's sustainability goals by incorporating environmental, social and governance (ESG) criteria and best practices. Generating guidelines for operations requires identifying the key processes, risks, controls and performance indicators for the startup.
Employee benefits: Employee benefits are the non monetary rewards and incentives that a startup offers to its employees in addition to their salary. Employee benefits can help motivate, engage and retain employees by enhancing their well-being, satisfaction and loyalty. They can also reflect the startup's commitment to sustainability by offering benefits that support the health, safety, diversity and development of employees. Employee benefits can include health insurance, retirement plans, flexible work arrangements, training opportunities, recognition programs and social events.
Diversity, Equity & Inclusion: DEI principles and practices promote a culture of respect, fairness and belonging for all employees regardless of their identity, background and perspective. DEI in the company can benefit sustainable startups by fostering creativity, innovation, productivity and customer satisfaction. It can also enhance the startup's reputation, credibility and social impact by aligning with the values and expectations of its stakeholders. DEI in a company involves implementing strategies such as recruiting diverse talent, providing equal opportunities, addressing bias and discrimination, and encouraging dialogue and collaboration.
Impacts & Strategies
Impacts refer to the measurable outcomes that startups aim to achieve through scaling up.
Strategies refer to comprehensive plans or sets of actions designed for the startup to scale up.
The final layer of the Model also consists of two parts: Impacts & Strategies. This layer focuses on what effect it has on the external context of the startup, for example, their customers, beneficiaries, the environment and other stakeholders involved. The first part consists of impacts which intricately link the startup's core vision and the scale up strategy. The impacts evolve from the three pillars of the value creation layer, and are categorised as: environmental impact, economic impact and social impact. The strategy elements are in the final layer besides the impacts, which focus on the delivery and capture of values for the scale-up. These strategies help sustainable startups to reach more customers, create partnerships and find potential investors for scaling up. These consist of three elements: Circularisation Strategy, Branding & Communication Strategy and Fundraising Strategy. The Model recommends a set of questions that help sustainable startups derive the metrics and extent of their impacts:
Social Impact:
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How do our value-creation mechanisms affect society?
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How can we track and measure the ‘desired experience’?
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How can we compare our ‘desired state’ with the existing state of the world?
Environmental Impact:
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How does the ‘desired experience’/’desired behaviour’ affect the environment?
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What is the economic footprint of our value-creation mechanisms?
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How can we benchmark the environmental footprint of our ‘desired state’ with the existing state of the world?
Economic Impact:
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What is our valuation goal?
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How much revenue can our business model generate?
Number of beneficiaries:
This metric indicates how many people are directly or indirectly affected by the startup's products or services. For example, a startup that provides affordable solar lamps to rural communities can measure how many households have access to clean and reliable lighting.
Customer satisfaction:
This metric indicates how satisfied or happy the customers are with the startup's products or services. For example, a startup that delivers healthy and organic meals can measure how satisfied the customers are with the taste, quality, and delivery of the food.
Carbon emissions:
This metric indicates how much greenhouse gas emissions are avoided or reduced by the startup's products or services. For example, a startup that offers electric vehicles for urban transportation can measure how much carbon dioxide they save from burning fossil fuels.
Life Cycle Assessment:
This metric indicates how much positive or negative impact the startup's products or services have on the environment. For example, a startup that produces biodegradable packaging can measure how much plastic waste they prevent from polluting the land and sea.
Income generated:
This metric indicates how much income or savings are created or increased by the startup's products or services. For example, a startup that connects small farmers to global markets can measure how much income they earn from selling their produce.
Startup Valuation:
This metric indicates how much the startup is worth in the market based on its current or projected financial performance. For example, a startup that offers solar-powered lighting solutions can measure its valuation by comparing it to similar companies in the sector or by using discounted cash flow analysis.
Branding and Communication Strategy:
Brand and Communication Strategy encompasses the development of a strong brand identity and the effective communication of that identity to the market. For sustainable startups, investing in an effective Brand & Communication Strategy is not just about creating a logo or a tagline; it's about weaving a narrative that captures the essence of the company and inspires engagement, loyalty, and growth. Some essential elements of a Brand and Communication Strategy are:
Customer Acquisition: This involves identifying, attracting, and converting potential customers into loyal buyers of your products or services. For sustainable startups, customer acquisition is a key challenge as they need to overcome the barriers of price, convenience, and awareness that often hinder consumers from choosing sustainable options.
Customer Retention: Build long-term relationships with your existing customers by providing them with excellent service, value, and satisfaction. Encourage repeat purchases, referrals, and feedback from your customers. Leverage loyalty programs, social media, and newsletters to keep them engaged and informed about your sustainability impact.
Creating Awareness: This involves educating and informing your target audience about the problem you are trying to solve, the solution you are offering, and the benefits of choosing your products or services. For sustainable startups, creating awareness is vital to overcome the knowledge gap and the scepticism that often exists among consumers about sustainability claims.
Communicating Sustainability Impact: This involves reporting the environmental and social impact of your products or services. For sustainable startups, communicating sustainability impact is essential to demonstrate their commitment and contribution to the SDGs, the triple bottom line, and the circular economy.
Customer Acceptance: This involves influencing and persuading your target customers to adopt and use your products or services. For sustainable startups, customer acceptance is a critical factor for scaling up as they need to overcome the resistance and inertia that often prevent consumers from changing their habits and behaviours.
Creating Consistent Brand Language: This involves developing and using a consistent tone, style, and voice for your brand across all your communication channels and materials. For sustainable startups, creating a consistent brand language is important to build trust, recognition, and loyalty among your target customers and stakeholders across all their offerings as they grow.
Sufficiency: Sufficiency is a principle that aims to reduce the overall consumption and demand for resources by encouraging more mindful and responsible behaviours. A sustainable startup can adopt sufficiency strategies to scale up its impact, such as offering products or services that meet the essential needs of customers without excess or waste, promoting sharing or leasing models instead of ownership, or educating customers and stakeholders about the environmental and social consequences of their choices. For example, a sustainable startup that provides solar-powered lighting can offer a pay-as-you-go model that allows customers to only pay for the energy they use rather than buying the whole system.
Circularization Strategy:
Circularisation Strategy refers to the design and implementation of a BM that minimizes waste and maximizes the reuse and recycling of resources throughout the product life cycle. For sustainable startups, investing in a robust Circularisation Strategy is essential to scale up as it helps them manage their increasing wastes and costs through partnerships and collaborations. Some essential considerations in this element are:
Partnerships: A sustainable startup can benefit from finding partners who share its vision and values and can provide complementary skills, resources, or networks. Partners can help the startup to access new markets, customers, or suppliers, to collaborate on research and development, or to co-create circular solutions. For example, a sustainable startup that produces biodegradable packaging can partner with a food delivery company that wants to reduce its environmental footprint and offer a circular service to its customers.
Product Lifecycle Analysis: Product lifecycle analysis assesses the environmental impacts of a product from cradle to grave, covering all the stages from raw material extraction, production, distribution, use, and disposal. A product lifecycle analysis can help a sustainable startup identify the hotspots and opportunities for improving the circularity of its product, such as reducing the material and energy inputs, extending the product lifespan, or enhancing the recyclability or biodegradability of the product.
Enable Reuse, Recycle and Repair: Enabling reuse, recycling and repair is a key aspect of a circularization strategy, as it prevents the waste of valuable materials and resources and reduces the need for virgin inputs. A sustainable startup can design its products or services to facilitate reuse, recycling and repair, such as using modular or standardized components, providing clear instructions or labels, or offering incentives or discounts for returning or exchanging products. A sustainable startup can also collaborate with other actors in the circular ecosystem, such as repair shops, recycling facilities, or waste collectors, to ensure that its products or services can be properly reused, recycled, or repaired after use. For example, a sustainable startup that makes clothing from recycled materials can partner with a local charity that collects and redistributes unwanted clothes or with a textile recycling company that can transform worn-out clothes into new fabrics.
Waste Reutilization: Waste reutilization is the process of transforming waste materials into new products or services, such as compost, biogas, furniture, or art. Waste reutilization is a vital component of a circularization strategy, as it reduces the environmental impacts of waste disposal, such as greenhouse gas emissions, land use, or pollution, and creates value from otherwise wasted resources. A sustainable startup can implement waste re-utilization in its business model by sourcing its inputs from waste streams, such as agricultural or industrial residues, or by offering solutions for waste management, such as collection, sorting, or processing. A sustainable startup can also leverage the potential of waste reutilization to generate social and economic benefits, such as creating jobs, saving costs, or enhancing community engagement. For example, a sustainable startup that makes paper from elephant dung can provide income and empowerment to local communities that collect and supply the raw material.
Fundraising Strategy:
A fundraising strategy is a plan that outlines how a sustainable startup will secure the financial resources it needs to scale up. It includes identifying potential sources of funding, such as grants, loans, equity, crowdfunding, or donations, and developing a compelling pitch that showcases the value propositions and impacts of the startup. A fundraising strategy is important for the scale up process because it enables the startup to overcome the financial barriers and risks that often hinder the adoption and diffusion of circular business models. It also helps the startup to build trust and credibility with stakeholders, such as customers, investors, partners, and regulators, who are essential for the success and sustainability of the business. Some possible types of fundraising strategies for startups looking to scale up are:
Investments & Debt: Startups can raise funds from individual or institutional investors who are willing to provide capital in exchange for equity or debt. Investors may be motivated by financial returns, social impact, or both. Investors may also offer non-financial support such as mentorship, advice, networks, or access to markets. Startups should identify potential investors who share their vision and values and prepare a compelling pitch that showcases their value proposition, traction, and scalability potential. They should also understand the terms and conditions of the investment, such as the valuation, dilution, exit options, and governance rights, and negotiate them accordingly.
Grants: Startups can apply for grants from foundations, governments, NGOs, or other organizations that offer funding for specific purposes or sectors, such as innovation, social impact, or environmental sustainability. Grants are usually non-repayable and do not require equity or debt, but they may have eligibility criteria, application processes, reporting requirements, and performance indicators that the startups need to comply with. Grants can help startups scale up their offerings without giving up ownership or control of their ventures.
Subsidies: Startups can benefit from subsidies that reduce the cost of inputs, operations, or outputs, such as tax incentives, rebates, vouchers, or discounts. Subsidies can be provided by governments, utilities, or other entities that want to encourage certain activities or behaviours, such as energy efficiency, waste reduction, or social inclusion. Subsidies can help startups lower their expenses, increase their margins, or reach new customers without affecting their revenue streams or growth prospects.
Recognitions: Startups can participate in competitions, awards, or challenges that recognize and reward their achievements, innovations, or impacts. Recognitions can be organized by media, academia, industry, or other stakeholders who want to showcase or support the best startups in a given field or region. Recognitions can provide startups with exposure, credibility, feedback, or connections, as well as cash prizes, in-kind services, or access to opportunities, such as incubators, accelerators, or networks. Recognition can help startups gain visibility, validation, or traction without requiring any upfront investment or commitment.
Directions of Use
The Sustainability Scale-up Framework (SSF) can support the creation, analysis, innovation and validation of sustainable and scalable business models. It is recommended to use this model in interdisciplinary teams involving the founders, strategic designers, operational managers and key stakeholders from its various departments. This model follows an iterative process 4 step process, which lies at the core of the strategic design approach.
Practical Implications of the SSF
The SSF has several practical implications for startups, investors, policymakers, and researchers who operate in the domain of scaling up sustainable business models. Some of these implications are discussed below:
An assessment tool: The SSF provides a comprehensive and systematic approach to assess the scalability and sustainability potential of a startup, as well as the gaps and challenges that need to be addressed. The framework can help startups map their current business model, prioritise their actions, and align their decisions with their sustainability goals.
A strategy creation and innovation tool: The SSF also offers guidelines and prescriptions that can support startups in designing and implementing scalable and sustainable business models. The four step iterative approach of this framework enables stakeholders to co-create effective strategies with a holistic perspective of the social, environmental and economic values of the startup.
A Collaboration & Communication Tool: The SSF can facilitate collaboration and communication between startups and their stakeholders, such as investors, customers, suppliers, partners, employees, regulators, and society. The framework can help startups articulate their vision and values, as well as demonstrate their social and environmental impact, competitive advantage, and financial viability. The framework can also help startups find and attract the right partners, resources, capabilities, and networks that can support their scaling-up process while maintaining or enhancing their sustainability performance.
A Research Tool: The SSF can contribute to the research and development of more supportive, conducive and scalable SBMs for sustainable entrepreneurship and innovation. The framework can help researchers and regulators understand the needs and challenges of startups that aim to scale up their sustainable business models and design appropriate literature, policies and regulations that can enable and incentivise them. The framework can also help investors and researchers evaluate and compare the scalability and sustainability potential of different startups and provide them with relevant feedback and guidance.
These implications point towards the applications of strategic design and the role of strategic designers, who can leverage the SSF to assess and innovate new scale-up strategies for SBMs, facilitate effective collaborations and create literature and policies in the domain of SBMI and Scaling SBMs.
Curious about how the SSF can help your Sustainable business or initiative?
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