According to a study by the Material Innovation Initiative, the “next” materials sector lost 53% of investment in 2022, from USD 980.3 million to USD 456.7 million. Too much to think that it is only the fault of the crisis. Enough to believe it is the consequence of increased scepticism about their supposed sustainable excellence compared to, for example, leather
If we wanted to look on the bright side, we could mark this percentage in red: +7%. It relates to growth, covers the year 2022, and takes 2020 as its touchstone. A season, the latter, whose results should be read with particular care, given how the pandemic has made it a historical watershed. But, necessarily, we must put another percentage in the spotlight: 53%. In this case, however, it is negative because, in front, it displays the sign ‘-‘.
This sharp halving identifies the drop in investment in so-called ‘next-gen materials‘ between 2022 and 2021. It is no coincidence that during the same period, the trend of asking questions about their real alternative identity to all other materials, starting with leather, has emerged strongly, at least in the Anglo-Saxon press. And that a growing number of bodies and institutions have raised their guard against the unfortunately endemic misleading marketing practices that plague fashion.
Asking questions about next-gen materials
The finding came from a report signed Material Innovation Initiative and titled The 2022 State of the Industry Report: Next-gen Materials. 2022, it says, was the year “of the crackdown on greenwashing in the fashion industry“. Could it be that there is a direct relationship between this and the reduction in capital raised by next-gen materials? We are inclined to answer ‘yes’. Not least because we are not talking about cheap.
In 2021, next-gen materials had collected financial backing of almost a billion dollars (980.3 million, to be exact), while in 2022, they found themselves with only 456.7 million in the till. Such a collapse calls for reflection and the search for possible causes. To ask questions, perhaps uncomfortable ones for the world of ‘new generation / vegan oriented / green as can be’ alternatives. This, however, they say.
The Material Innovation Initiative report does not elaborate on why there has been such a slump in investment. It merely says there was an investment boom in 2021, and then came the crisis that inevitably affected the sector. That may be, but only up to a point, because we know that there is no crisis when investors smell a bargain.
On the contrary: precisely during such conjunctures, they channel their capital into investments considered safer precisely in order to shelter themselves from uncertainty. It goes without saying that this is not the case for new-generation materials. How come? One reason is that the sector is probably considered too young, unstable and composed of companies that do not have solid economic fundamentals and are too exposed to financial fluctuations. It fits, but there is more.
Scepticism does not pay
In fact, 2022 was also the year of emerging media scepticism (involving, in particular, many prominent Anglo-Saxon publications) towards next-gen materials and their alleged sustainable superiority, both in an absolute and comparative sense. The report, however, glosses over this while pointing out ‘how looking at the 10-year period from 2013 to 2022, the capital invested, and the number of deals continued to grow’. Too easy.
The sector is small; it is a kind of start-up: of course, any growth represents a kind of explosion and brings high expectations. Expectations disappointed in 2022 to the extent that this year brought only 28 fundraising operations that yielded $456.7 million. This is drastically lower than the previous year. Generating scepticism (finally) does not pay off. We shall see what happens in 2023.