Vegan and renewable textiles are seeing a boom
The last ten months has seen bio-based fashion startups sustain its investment bonanza of 2021, when three of the top four biomaterial funding runs went to vegan textile producers.
Once again, bio-based textiles have snapped up the highest three biomaterial funding runs of 2022. MycoWorks comes in first at $125 million, Evolved By Nature second with $120 million, and Natural Fiber Welding third at $85 million.
In total, five bio-textiles companies have bagged more than $10 million in funding rounds between January and October 2022, while a sixth, called Material Exchange, received $24.4 million for its platform that matches fashion retailers with sustainable suppliers.
Here, we profile these early movers in the emerging market for bio-based apparel.
Fashion biomaterials – mycelium
Market researchers are predicting the sustainable textiles market will see a 12.5 percent compound annual growth rate between now and 2030. Bioeconomy investors are taking this optimistic forecast seriously, targeting their cash at the renewable and vegan textile segment.
Mycelium is proving to be the textile feedstock of the moment. In 2021, there were at least eight mycelium leather companies around the world but two have drawn major investor confidence over the last ten months.
One is the South Korean company Mycel, which offers an alternative to animal leather made from mycelium.
Mycel was founded in 2020 by former Hyundai Motor employees Sah, Sungwon Kim (COO), and Yunggon Park (CSO). The company drew $10 million in investment in September 2022 in a financing round that includes Korea Development Bank, Industrial Bank of Korea, Hyundai Motor Zero 1 Fund, Stone Bridge, We Ventures, and Spring Camp. Its pre-investment valuation was approximately $40 million.
Mycelium, Mycel’s feedstock, are long, thread-like underground structures that anchor and absorb nutrients for fungi. What makes these subterranean threads so useful in making leather substitutes are its tough, fibrous organic constituents: chitin, cellulose, and proteins.
The company’s mycelium portfolio currently contains around 443 different strains. Mycel uses gene editing (CRIS-PR) to modify the physical and developmental properties of their fungi, such as cellular behaviour, growth rate, material strength, and nutritional composition. These alterations make the mycelium suited to various applications.
Mycel’s mycelial ambitions extend beyond vegan leather and food. Their website elaborates a comprehensive vision of a bio-based capitalism based on renewable, circular commodities.
It argues that fungal biotechnology can support this vision, pointing to its versatile applications in environmental remediation as well as in cosmetics and pharmaceuticals. It also highlights how the fungi’s ecosystem function in recycling organic waste can inspire circular economic processes.
MycoWorks is the other mycelium textile company to have received a significant financing boost this year. In January, it picked up £125 million in Series C funding from SK networks, Mirabaud Lifestyle Impact, Innovation Fund, DCVC Bio, Novo Holdings, and others.
Founded in 2013 by US artists Sophia Wang and Phil Ross, the San Franciscan startup began by developing rigid architectural panels from mycelium. Eventually, the founders also hit upon a method for crafting fashion leather, now marketed under the brand name Reishi.
Its flagship product comes in three finishes: Black, Core, and Natural. Yet like Mycel, Mycoworks materials can be custom-grown using a patented manufacturing platform called Fine Mycelium, which adjusts mycelium cells as they develop.
Mycowork’s $125 million will be dedicated to general expansion, including scale-up at its semi-automated Emeryville pilot plant, growth of its team, and continued R&D.
Plant biomass may well make a comeback
Some commentators are sceptical of the vegan leather ventures now sweeping the biomaterial investment stakes. One of them is Luke Haverhal, who founded Natural Fiber Welding in 2015.
Natural Fiber Welding produces vegan leather for fashion as well as automobile upholstery. Unlike Mycel and Mycoworks, however, it adopts a more tried-and-tested feedstock: photosynthetic plant biomass.
In a recent Linkedin post, the founder explained why mycelium’s sustainability advantages are scant when compared to traditional plant biomass.
His objection focuses on the fact that using fungi, which cannot turn sunlight into energy like plants, adds an unnecessary intermediary step in the bio-manufacutring process.
“Mushrooms do NOT perform photosynthesis and thus must CONSUME energy/food to grow/exist. Mushrooms are either FED PLANTS in order to grow and/or are also sometimes FED MANURE from animals”, Haverhals wrote. In short, he says, ‘“biotech is a waste of time in material markets”
He is confident that his company’s plant-based textiles offer a more sustainable, saleable, and financially sound alternative to animal leather than the CRIS-PR mycelium startups that dominate this year’s biobased investments.
While plant feedstock may not have the weird and wonderful allure of gene-edited mycelium, investors are taking note of Haverhal’s approach. Natural Fiber Welding earned $85 million in financing in April 2022. The company plans to spend it on scaling the business from batch processing to commercial capacity.
The round drew funds from BMW I Ventures and Ralph Lauren, as well as Evolution VC Partners, Tattarang, Lewis & Clark AgriFood, Collaborative Fund, AiiM Partners, Engine No.1, Raga Partners, Tidal Impact, Scrum Ventures, Gaingels, Advantage Capital, and Central Illinois Angels.
Textile manufacturing Ingredient Bags Top Spot
Evolved By Nature, a Massachusetts-based biotech company, obtained 2022’s highest investment round so far, not just in vegan textiles but across the biomaterial sector overall. Its $120 million in Series C funding was just $5 million short of 2021’s highest biomaterial funding round, which went to Bolt Threads.
The funding was led by Teachers’ Venture Growth, Mousse Partners, Wetheimer family (Chanel’s owner), Jeff Vinik, The Craft Group, Roy Disney, and Emerald Development Managers.
Activated Silk is designed to replace the synthetic petrochemicals currently used in fashion textiles to achieve properties like water-resistance. These substances prevent products from achieving full biodegradability.
Evolved By Nature will use the investment to scale Activated Silk, a natural liquid silk protein used to make leather, textiles, and skincare products. The company plans to increase its current 150 metric ton rate per year production rate to 900 metric tons per year.
Fashion From The Sea
At $13 million, Brooklyn-based AlgiKnit is the only algal textile startup to surpass the $10 million funding mark in 2022 so far. The funding was led by Collaborative Fund, H&M CO:Lab, Starlight Ventures, Third Nature Ventures, Horizons Ventures and SOSv.
This is an impressive sum for a company still developing its first product. Although AlgiKnit released a prototype yarn in 2017 shortly after it was founded, they are now working towards a smoother and more luxurious product to roll out for pilot projects with fashion brands.
Demand for AlgiKnit’s algae yarn comes from fashion companies keen on reducing their environmental footprint. According to the company, their low-input kelp products can displace resource-intensive petrochemical clothing components such as acrylic and polyester.
Slippery fronds of marine kelp may seem distant from the fibrous fabrics in your wardrobe. Like mycelium, however, algal biomass harbours organic components that are ideal for processing into wearable materials. “The yarn we’re producing today has the look and feel of the natural fibers consumers are familiar with,” said Aaron Nesser, co-founder and CTO of AlgiKnit.
For those still sceptical of algae’s textile potential, they might yet be convinced by Scarlett Yang’s ethereal designs. The Central Saint Martins graduate released a line of algae-extract and silk cocoon dresses in 2020 which make a superlative showcase for algae’s material versatility. The material, which appears to be made of glass, changes form across different humidity and temperature levels. It also decomposes within hours in water.
A Sustainable Textiles Platform
The third highest investment round of 2022 so far went to another fashion-related startup, Material Exchange, which won $24.5 million.
Sweden-based Material Exchange offers a web and mobile app that makes it easier for companies to source sustainable materials and recycling services by browsing a list of subscribed suppliers and their products. The platform also displays any procured materials and workflows.
While sustainable suppliers are growing, many operate at a relatively small scale. Services like Material Exchange are crucial for lowering barriers between fashion producers and products that serve their needs while lowering marketing costs for green manufacturers.
Outlook
The post-pandemic energy and economic crises present a challenging landscape for bio-based commodities, which largely remain at the pre-scaling stage. However, the medium-term outlook for the sector remains robust.
Vantage Market Research predicts global demand for green chemicals will display 9.10 percent compounds annual growth rate for revenue by 2028. Allied Market Research foresees the biomaterials market to grow at a rate of 12.7% percent between 2021 and 2030.
While investors in these spaces will likely become more selective in their asset choices, there is no shortage of innovations waiting to be backed as biotech turns away from fuels towards the consumer goods markets. Bio-based textiles are exemplary of this trend. It remains to be seen whether the current crop of start-ups can sustain consumer interest through economic recession and mature into high output companies.
