A Running Timeline of Sustainable Investments and M&A

A growing number of investment rounds are bringing sustainability-centric endeavors and more often than not, sustainability-focused tech, to the fore, as consumers and shareholders, alike, continue to focus on the sizable role that retail – including fashion industry – plays in the larger climate crisis. With rising consumer awareness and resulting demands for action and transparency on this front, investors increasingly taking environmental, social, and governance (“ESG”) factors into account when making decisions, and lawmakers across the globe pushing for climate-centric legislation in light of rampant greenwashing, we have put together a (running) timeline of funding and M&A to provide a broad overview of sustainable investments in fashion and the broader retail space, and shed light on what the trajectory of this segment of the market looks like more generally … 

Nov. 3, 2022 – Textile Startup Smartex Raises $24.7M in Series A

Smartex closed a $24.6 million Series A round led by Lightspeed Venture Partners and Tony Fadell’s Build Collective on the heels of the Porto, Portugal-based startup winning the 2021 Web Summit PITCH competition. Other investors include H&M Group, DCVC, SOSV’s HAX, Spider Capital, Momenta Ventures, Bombyx Capital Partners, Faber, and Fashion for Good. Founded in 2018, Smartex uses hardware-enabled, machine-vision-driven software to detect defects in textiles are they are being manufactured, enabling companies reduce textile waste, CO2 emissions, energy, water, production time, and capital expenditure by automatically shutting down production in order to prevent the waste of materials.

The company plans to use the new cash expand its business to new markets, and to develop additional product lines designed to aid manufacturers and fashion brands in improving control of their products while increasing textile quality and traceability.

Oct. 10, 2022 – Mango Invests in Textile Resale Platform Recovo

Spanish fast fashion company Mango has invested in Recovo, a B2B marketplace for brands looking to buy and sell leftover – or deadstock – fabrics by way of a convertible note entered into by its StartUp Studio. Barcelona-based Recovo, which was founded in 2021 by former Inditex employees, Mónica Rodríguez and Marta Iglesias, and former Tous employee Gonzalo Sáenz, will use the new funds to expand operations on its platform and its model more broadly, the latter of which sees it use “technology, traceability and community involvement to promote a circular economy.” The terms of the deal have note been disclosed.

Sept. 14, 2022 – Patagonia Crafts New Ownership Structure

Since Patagonia’s founding in 1973, Yvon Chouinard and his family have been its owners. Now, almost 50 years later, the Chouinards are transferring all ownership to two newly created entities in an effort both to cement the company’s values in its operating structure and step up its fight against the climate crisis. All voting stock (about 2% of the total) is now controlled by the Patagonia Purpose Trust, while the other 98% is under what’s called the Holdfast Collective.

July 12, 2022 – Start-Up CIRC Raises $30M in Series B

Zara-owner Inditex has participated in a $30 million Series B funding round for circular fashion startup CIRC, led by the Bill Gates-founded Breakthrough Energy Ventures and with additional investment from Milliken & Company and Lansdowne Partners. The 11-year-old textile recycling company, which uses proprietary technology to return clothes to the raw materials from which they were made, says it will use the new cash to “complete its engineering work for larger-scale facilities while continuing commercial launches with key partners, [and to] add core team members in engineering, R&D, management, and business development.” 

July 6, 2022 – Simplifyber Raises $3.5M in Seed Round

Touting itself as the creator of “the world’s first fully-molded garment and shoe uppers made directly from a cellulose-based liquid,” Simplifyber, Inc. closed a $3.5 million seed round led by At One Ventures. The company, which was co-founded by Maria Intscher-Owrang, a design veteran of Vera Wang, Calvin Klein, Alexander McQueen, Dirk Bikkembergs, and Edun, says that it has “developed a novel approach to clothing and accessory manufacturing that removes traditional spinning, weaving, cutting, and sewing and replaces it with a sustainable, less resource-intensive process, and fully biodegradable solution – cutting out 60% of the steps and reducing the 35% of materials in the fashion supply chain that ends up as waste.” 

The company will use to funds to scale its its additive manufacturing technology to “bring economically competitive biodegradable garments to market.”

June 30, 2022 – Chanel-based Evolved by Nature Raises $120M in Series C

Evolved By Nature, the company creating a proprietary library of molecules from natural silk protein, closed a $120 million Series C financing round to “accelerate development and commercialization of [its] Activated Silk™ molecules and fund the completion of its state-of-the-art production facility.” The round was led by Teachers’ Venture Growth part of the C$242 billion Ontario Teachers’ Pension Plan Board, with participation from existing investors including Mousse Partners, Jeff Vinik, The Kraft Group, Roy Disney, and Emerald Development Managers. (Existing investor Chanel, which took a minority stake in the company in 2019, did not participate in the Series C.)

June 28, 2022 – Supply chain startup Circulor Raises $25M Series B

Circulor, which uses blockchain technology to map supply chains for companies “pursuing greener, more sustainable production,” announced a raised $25 million Series B round, led by Westly Group, with participations from the venture arms of Volvo, Jaguar Land Rover, and BHP Group. “U.S. industry is increasingly interested in not just origin, but also demonstrating ESG performance because the SEC has made clear that the greenwashing and war of glossy brochures isn’t good enough,” Circulor CEO Douglas Johnson-Poensgen told Reuters, citing regulatory pressure from the U.S. Securities and Exchange Commission

Johnson-Poensgen stated that Circulor is planning for an initial public offering “in due course.” 

June 13, 2022 – Recover Raises $100M in Goldman-Led Round 

Recover, a materials science company and producer of “sustainable, premium recycled cotton fiber and cotton fiber blends,” announced that it has closed a new $100 million minority equity capital investment led by the Sustainable Investing business within Goldman Sachs Asset Management (Goldman Sachs). Goldman Sachs is investing alongside majority shareholder STORY3 Capital Partners. Recover – which counts Primark, Inditex, C&A, Revolve and Lands’ End as clients – will use the investment to accelerate its global expansion and production capacity, allowing more rapid adoption of sustainability initiatives by leading brands and retailers.

June 8, 2022 – H&M Group and Lululemon Lead Investment in Climate Fund

H&M Group and Lululemon are among the leading investors in a Fashion Climate Fund spearheaded by nonprofit Apparel Impact Institute. The $250 million fund aims to “support new programs and solutions with a structured pipeline for getting from pilot to scale,” Apparel Impact Institute stated in a release. “We believe it provides a powerful mechanism to overcome the challenges of getting new solutions implemented by the industry, and thereby accelerate the progress on climate action.”

According to Axois, the fund has “attracted $40 million from H&M Group and Lululemon, plus the H&M Foundation and the Schmidt Family Foundation,” noting that further lead partners are expected to each invest a minimum of $10 million over the next eight years.

May 4, 2022 – Kering Invests in Alternative Leather Startup VitroLabs

Gucci-owner Kering is one of the investors in a $46 million Series A round raised by VitroLabs, along with actor Leonardo DiCaprio, agriculture-focused VC Agronomics, Bestseller’s Invest FWD innovation arm, Khosla Ventures, New Agrarian, and Regeneration VC, among others. California-based VitroLabs, which makes cellular-cultivated leather that “replicates the structure of animal hides,” will use the funding to scale-up its operations and expects to start pilot manufacturing this spring.

“At Kering, a chapter/pillar of our sustainability roadmap is dedicated to sustainable innovation and actively looking for alternative materials that can reduce our environmental impact over the long term is part of the solutions we have been exploring for years. We believe that innovation is key to addressing the sustainability challenges that the luxury industry is facing, which is why we are very interested in the potential of biomaterials such as cultivated leather,” Marie-Claire Daveu, Chief Sustainability and Institutional Affairs Officer at Kering, said in connection with the finding announcement.

April 27, 2022 – Higg Raises $50 Million in Series B

Controversial sustainability insights platform for the consumer goods industry Higg has raised $50 million in a Series B funding round. The funding is co-led by technology growth investor Silversmith Capital Partners and Tom Steyer and Katie Hall’s Galvanize Climate Solutions, along with participation by Series A partners Titan Grove and Buckhill Capital. With close to 50,000 brand and manufacturer users in 100+ countries, Higg says that it “enables continuous improvement of supply chain sustainability—across not only carbon but water, energy, and labor impacts as well.” The new cash will accelerate Higg’s “delivery of innovative technology solutions and its rapid expansion into new consumer goods categories.”

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