Investments in the next-gen material sector dropped to $457 million in 2022 from $980 million the previous year. Nevertheless, the year saw 117 new investors in the sector.
The numbers on the new 28 publicly disclosed deals come from the 2022 State of the Industry Report: Next-Gen Materials, released by the Material Innovation Initiative (MII) on Thursday.
The Drop: The report remarked: “In 2021, we saw an unprecedented spike in capital invested in next-gen materials companies, notable exits such as Spinnova’s IPO accounted partly for the sharp increase. 2022 represented a more challenging investment atmosphere, and the next-gen materials space was not immune to the adjustment.”
- However, looking at the 10-year track from 2013 to 2022, the capital invested and the number of deals continued their upward momentum.
The Big Picture: Of the 102 companies in the field, the majority (64) work on biomimicry of animal leather. Fifteen work on biomimicry of silk, ten on wool, nine on fur, seven on down, and one on exotic skins.
- In all, 69 new companies have been formed and $3 billion invested since 2013.
- Over 60% of current players in the next-gen materials sector target next-gen leather, leaving other categories such as silk, wool, down, fur, and exotic skins with limited innovation efforts.
Notable funding in in 2022 included:
- MycoWorks’ $125 million Series C round closed in August, followed by a Series C2 closed in October 2022, estimated at US$63 million.
- Natural Fiber Welding (NFW) closed $83 million Series B in April, followed by a debt financing of $19.97 million in December 2022.
- AlgiKnit (now Keel Labs) closed a $15.46 million Series A funding round led by Collaborative Fund (also an investor in BOLT, NFW, and Modern Synthesis), which launched a new $200M climate-solution-focused fund with Stella McCartney this year.
- Cultivated leather startup VitroLabs secured Series A funding of US$47.40 million in May 2022; investors included global luxury fashion group Kering.
- Save the Duck was also acquired for an undisclosed amount.
Major partnerships between brands and innovators in 2022:
- In September, Allbirds released the Plant Pacer, a sneaker made with Natural Fiber Welding’s (NFW) next-gen leather Mirum.
- In October, General Motors announced its investment, via its VC arm GM Ventures, in MycoWorks to secure joint R&D in an industrial partnership seeking to develop a mycelium animal-leather replacement that best suits the interiors of GM cars.
- In November, tannery Ecco Leather—a company from Ecco Shoes, started working with Ecovative to create new leather-like alternatives.
What They Said:
Technologies and innovation can drastically revolutionize the business by developing environmentally preferred and animal-free materials that match brands' and customers' aesthetic, performance, and pricing requirements. It is an encouraging sign that the next-gen materials industry has grown beyond the innovators disrupting the incumbents. Established industry titans are also coming together to build a better materials industry for everyone.
— Elaine Siu
Chief Innovation Officer
Material Innovation Initiative
We expect 2023 to be a transition year in which the fashion industry figures out how to share accurate information around sustainability. With increased wariness of sustainability claims and lack of comparable environmental impact data, we expect more government regulation of sustainability claims, fewer companies discussing sustainability in their products, and less consumer understanding of the impact of their choices.
— Nicole Rawling
Co-Founder and Chief Executive Officer
Material Innovation Initiative
