This study examines how a sustainable venture built on regional cultural heritage achieved business model innovation through upcycling. We present a case study of a Korean startup that transforms a traditional distillery by-product - Andong Soju lees (fermentation waste known as sul-jigemi) - into high-value food products. The case illustrates how tradition and innovation can be synergistically combined to create a new business model. We detail the startup’s multidimensional value proposition, encompassing eco-friendliness, health functionality, cultural authenticity, and social impact, as well as its circular business model that converts “waste” into marketable products. Our analysis, based on qualitative data from interviews, observations, and archival documents, reveals that leveraging an intangible cultural asset (a 700-year-old regional liquor tradition) as a resource for sustainable innovation enabled the venture to differentiate itself in emerging markets. The findings contribute to literature on business model innovation and sustainable entrepreneurship by illuminating how upcycling of cultural heritage by-products can deliver economic, environmental, and social value. We discuss implications for theory and practice, highlighting the potential of cultural heritage-based innovation in driving regional circular economies.