Italy First in Europe in the Circular Economy

Italy confirms its position as a European leader in the circular economy. According to the 2025 report by the Circular Economy Network (CEN), our country records a circular material use rate of 20.8%, almost double the EU average (11.8%). Recycling is another strong point: with 50.8% of municipal waste being recycled, Italy ranks second only to Germany.

Beyond the environmental impact, there are tangible economic effects: in 2024, circularity generated about €3.5 billion in direct GDP and €16.4 billion in savings for manufacturing companies.

These figures confirm that sustainability is not just a duty, but also a competitive advantage.

Startups and Innovation: A Thriving Ecosystem

The strength of the Italian model is also reflected in its innovation ecosystem. According to several surveys, today Italy counts over 800 startups and SMEs born with circular-by-design models. Our proprietary database at Tondo further broadens the picture, collecting information on about 1,000 active players in the circular economy among startups and SMEs.

Geographically, the North remains the focal point with the majority of initiatives and investments. However, the weight of the Center and especially the South is growing, which in 2024 attracted about a quarter of the deals — a sign that circularity can also become a driver for territorial rebalancing.

The landscape is extremely diverse and involves almost every production sector. At the top are digital services, which account for over a quarter of initiatives: platforms for environmental traceability using blockchain and IoT, sharing economy solutions, data intelligence tools. Next come mobility and logistics, with projects related to electric micromobility, shared fleets, and charging infrastructure.

The energy transition is another key sector, with startups working on renewable energy, storage systems, and energy recovery. Agrifood brings agritech innovations and regenerative supply chains capable of valorizing agricultural waste, while chemistry and innovative materials experiment with bioplastics and biodegradable materials.

Alongside these sectors, waste management, fashion and textiles, construction, and packaging are developing solutions ranging from fiber recycling to green building and compostable packaging. More recently, projects are also emerging in healthcare, tourism, and education, still marginal today but with great growth potential.

Between 2022 and 2024, Italian circular economy startups raised over €800 million in total. The trajectory has been uneven: 2022 was a record year with about €450 million, followed by a sharp slowdown in 2023 (€96 million) and a recovery in 2024 (€265 million), driven by greater attention to green investments.

Capital comes from multiple sources: venture capital (about 38%), public funds and grants (37%), corporates and business angels (12% each). This mix shows that circular finance is now a consolidated field, though still dependent on public support in the earliest stages.

Some of the startups we have followed in our batches illustrate well the potential of circular innovation in Italy.

W3DS transforms mussel shells — currently aquaculture waste — into calcium carbonate and aggregates for mortars and prefabricated components, also suitable for 3D printing. The proof of concept has been validated both in the lab and on a pilot scale, with results comparable or superior to quarry-derived materials. The business model integrates green building, partnerships with cement producers and the fishing industry, as well as educational initiatives on circular economy and additive manufacturing.

B&Y stems from experience in a family-owned marble workshop and turns stone dust, sludge, and scraps into a 3D-printable mortar using LDM technology. This solution reduces waste and costs while offering a sustainable alternative to traditional materials for furniture and building components. The project meets the growing demand for cleantech and construction tech, with a scalable model aligned with European decarbonization goals.

AraBat tackles one of the most urgent challenges: lithium battery recycling. Its bio-based hydrometallurgical technology, which uses local biomass such as orange peels, allows up to 95% recovery of valuable metals (lithium, cobalt, nickel) with lower emissions and energy consumption. The patented approach has already been validated at pilot scale and is designed to be replicable, activating circular supply chains globally.

These examples show how circularity is not just a theoretical concept but a concrete driver of industrial innovation and sustainable development.

2025 marks a crucial moment. Italy is already a European leader, but it has everything it takes to become an international hub for circular innovation.
For startups, this means fertile ground to grow; for venture builders, the chance to guide ideas and technologies toward scalability; for investors, the opportunity to combine economic returns with positive impact.

Platforms and communities like Tondo also play a key role, connecting businesses, startups, institutions, and investors for years, fostering collaborations and spreading knowledge.