Todd Mills – Director in BDO’s Edinburgh deal advisory team

British circular economy businesses attracted £2.2 billion in disclosed funding last year, a 64% increase on 2023’s figure, with 2024’s total boosted by larger deals. Although the number of transactions was broadly flat year-on-year, with 184 in 2023 and 183 last year, the higher overall deal value is “evidence of a maturing market”, according to BDO’s experts, with larger injections of capital on a per-deal basis.

Using the average disclosed investment as a guide, BDO estimates that the total amount invested in UK circular economy businesses last year could be £3.2bn, up from £2bn in 2023.

The methodology in the research – now in its seventh year – defines circular economy businesses as those that promote reducing waste, improving efficiency in resource use and extending the life of a product or system. The UK’s circular economy is one of the most significant in the world and includes companies in a diverse range of industries including manufacturing, technology, life sciences, food and drink, and FMCG.

The data shows that in 2024 venture capital and private equity investors continued to drive M&A activity. Together they accounted for 78% of all transactions (58% for venture capital and 19% for private equity, with rounding used), broadly in line with 2023’s figures (79% combined). BDO said investors’ appetite is underpinned by the circular economy’s focus on efficiency – using less to deliver more – along with government regulation that incentivises moves to a greener economy, pressure from investors and consumer expectations.

The rise in deal value in 2024 was driven by an increase in activity in industrials and manufacturing and the technology, media and telecoms (TMT) sectors. The strong performance of these categories offset a fall in both deal count and value across food & drink and retail & consumer where deal activity reflects the wider macroeconomic challenges faced by these sectors.

Todd Mills, director in BDO’s Edinburgh deal advisory team and circular economy specialist, said: “The UK’s circular economy is one of the most advanced in the world, with a cohort of innovative businesses able to attract growth capital from a sophisticated investment community.

“We’ve been tracking the sector for seven years now and, though 2024 was the first year in which the number of transactions remained flat, deal flow accelerated in the second half of the year, with investors encouraged by greater political certainty.

“The rise in overall deal value, meanwhile, is evidence of a maturing market. Investors are increasingly comfortable committing large amounts of capital to support the growth of circular economy businesses in a diverse range of industries and areas.”

BDO tracked seven transactions last year in which the disclosed value invested was over £100 million, up from three £100m+ deals in 2023. The largest single transaction in 2024 involved Renewi, a London- and Edinburgh-based waste management specialist, which attracted a £701m investment by Macquarie Capital. 

Among the significant circular economy deals so far in 2025 is recycling group CIRQLR, which is backed by iCON Infrastructure LLP. In April, CIRQLR announced the latest in a series of acquisitions, as it aims to help its business customers recycle and recover more from their waste. BDO advised CIRQLR on the acquisitions.

Claire Frangou, deal advisory partner at BDO, said: “The overall M&A market has had a subdued start to 2025, with deal flow affected by geopolitical uncertainty in certain markets around the world. Investors are now hoping things will settle down and that M&A activity accelerates in the rest of the year.

“Though the outlook is cautious given the external environment that businesses and investors are operating in, we expect the UK’s circular economy to be resilient.

“There’s been some negativity towards companies with sustainability at the heart of their business models elsewhere in the world, but we aren’t detecting that attitude shift here in the UK. We therefore expect investors to continue to be attracted to the strong fundamentals that underpin circular economy businesses.”

According to wider industry data, though the UK M&A market performed robustly in 2024, the venture capital segment suffered a slowdown as investors took a more selective approach to deploying their capital.

BDO began monitoring the UK’s circular economy in 2018 when it tracked 43 transactions with £210m of funding publicly disclosed.