Next gen materials’ companies collected 500 million from investors. This means an 8.6% increment on 2022, a year of crisis. Yet, the amount is not even half what the segment had collected in 2021, meaning 1.1 billion USD. Moreover, compared to 2022, the number of deals dropped (-30%) along with the risk capital (-42%). The Renewcell case is a perfect example of the difficulties encountered on this market. One of the main issues is that nobody along the chain, not even final consumers, want to pay a premium.
Investments
According to the yearly report by the Material Innovation Initiative, startups developing next gen materials (such as alternatives to leather, silk, fur) collected 500 million of investments in 2023, of +8.6% on the previous year. But the amount is far from the record 1.1 billion of 2021. The risk capital invested has decreased by 42% compared to 2022, according to CB Insights, while Business of Fashion reports the number of deals to be down 30%.
Bankruptcies
This segment was recently shaken by a few bankruptcies, such as those by Bolt Threads and Renewcell. The first manufactured Mylo, a material based on mycelium that was taken off the market in Summer 2023. The second used to recycle waste byproduct of textiles and apparel items, and make Circulose out of them. Founded in Sweden in 2012, Renewcell had contracts to supply a few players of the fashion industry and had H&M as majority shareholder. The company had an in-demand product and kept on increasing its production capacity. But at the end of February, it filed for bankruptcy. Why? Challenges tied to scalability, manufacturing process, and rising costs. And it’s still to be seen whether end consumers are willing to pay a premium price for it. Especially after the multiplying greenwashing scandals tied to materials sustainable in words but not fact.
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