Innovative Sustainable Start-Ups: Can They Ever Become Mainstream?

By Katie McKenzie 

As the fashion industry slowly begins to reckon with its need to change, we have begun to see the emergence of many innovative sustainable start-ups aimed at disrupting the inherently unsustainable fast fashion model; Fashion for Good has already identified over 1,500 viable innovators within their first 2 years of operating. These range from revolutionary sustainable materials such as Circulose to informative brand rating apps like Good On You.

The issue is that, according to Fashion for Good and BCG, the fashion industry requires $20-30 billion of financing per year to develop and commercialise disruptive solutions and business models that will move the industry towards a more sustainable future.¹ Currently, venture capitalists are the main source of funding for these innovative companies, though there are also some specialised funds, such as the Textile Innovation Fund and the Good Fashion Fund, that help kick start these fashion innovators.

However, venture capitalists and specialised funds can only get most of these innovators so far. In order to become ‘mainstream’ and really disrupt the industry model, further investment is still necessary but remains incredibly limited. Many innovators never make it past this key funding stage, and those that do unfortunately often find their funds in major fast fashion companies.

H&M has a fund that does just this – H&M CO:LAB. It aims to drive and promote entrepreneurship and make bets on the future of the industry. It tends to make later-stage venture capitalist deals with companies that are aiming to disrupt the fashion industry and work towards a more sustainable future. One such partnership launched the sustainable textile Circulose, which was featured in H&M’s 2020 'environmentally-friendly' collection. Theoretically, this was a win-win situation for both H&M and Circulose – H&M had more sustainable products, and the Circulose name had broken into the industry and become more mainstream. Yet H&M ultimately only used a small percentage of Circulose in the actual clothing of the collection; the rest was made up of easily greenwashable materials like rayon which has natural origins but is often unsustainably sourced from endangered forests.

The question is, did Circulose lose the disruptive nature of its corporate purpose by working with a fast-fashion company like H&M, or were they still able to challenge the industry by making incremental changes within the fast fashion model? Is it possible for innovative, sustainable start-ups to become more mainstream without losing sight of their own mission?

If the answer is yes, then alternative ways to popularize the work of these innovators are required. The only way I can see this happening is through a systematic, industry-wide change – and that’s perhaps a topic for a whole other blog!

There is still a long way to go, but I see hope in the number of innovations emerging out there. Even if they have to finesse the system to get to the top, I still believe they can make disruptive change – whether that’s from within the fast fashion model or on their own.

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Sources

1. Financing the Transformation in the Fashion Industry (Jan, 2020) & Investing in Textile Innovation Report (Oct 2019): https://fashionforgood.com/news/resource-library/.