Re-Imagining the Plastics Industry

Plastics are responsible  for 3.3-4.5% of the world's GHG emissions, amounting to ~1.8B tonnes annually. Under business as usual, this number is set to increase to 2.5-4.3B tonnes by mid-century. Emissions are primarily from the production (60%), distribution (29%), and disposal (11%) of plastics. Within production, current processes are dependent on fossil fuels, with 93% of plastics produced from these carbon-intensive sources. Beyond emissions, plastic pollution poses severe risks to both ecological and human health. Over 400M metric tonnes of plastic are produced annually and only 9% is recycled globally, leading to high accumulation in landfills and natural ecosystems. Due to a lack of effective recycling solutions that lead to waste mismanagement, microplastics are ubiquitous, found everywhere from marine environments to within humans. In marine ecosystems, microplastics have been found even in remote areas like the polar regions and the deep sea. Microplastics can absorb toxic pollutants, which are then transferred through the food web as a variety of animals unintentionally ingest them. In humans, microplastics have been detected throughout tissues and organs, where they are believed to pose risks including inflammation, toxicity, and even carcinogenicity.

As a result of this mismanagement, global legislation, particularly in the EU, is coming through to address plastic waste and require circularity for a range of plastic types. For example, analysis on the fashion industry shows that it faces over 35 new pieces of sustainability-linked regulation in the next 2-4 years, putting 8% of EBIT at risk for brands that do not comply by adjusting their materials portfolio mix. To get ahead of such legislation and meet consumer demands for sustainability, many companies have set circularity-specific targets and are experiencing a supply gap for recycled feedstock. For example, Kearney found that the US market could encounter a 55% supply gap for recycled polyethylene terephthalate (PET) by 2030, and gaps as large as 60-78% for recycled polyethylene (PE). The message is clear: to meet imminent circularity requirements and targets, innovation in both alternative materials and recycling is needed. 

The market opportunity is immense - on the recycling front - the market size for recycled plastics is projected to grow from $51B in 2023 to $107B by 2032, while the market for textile recycling is expected to grow from $5.7B to $8.5B by 2032. To decarbonise, corporates across textiles and consumer goods that currently rely on plastics have set aggressive material targets that entail getting close to 100% recycled or alternative materials by 2030. However, given a lack of technologies and materials that will enable them to do so, corporates are willing to invest directly in a variety of technologies and sign long term partnerships to help startups scale up in time to achieve their goals. This is a significant divergence from how textiles and other materials are traditionally procured, signalling substantial demand pull from customers. For example, Inditex, the parent company of Zara, Massimo Dutti, Bershka, and others is committed to using 100% preferred fibers by 2030. To enable this, Inditex signed a €100M three-year commitment with Infinited Fiber Company to buy 30% of their annual production volume of recycled cellulose, as well as a three-year agreement with Ambercycle to buy recycled polyester for over €70M. On the alternative materials front, fashion powerhouses Stella McCartney and LVMH backed a $200M climate fund, which is structured to accelerate go-to-market timelines of portfolio companies and derisk the technology to the point where brands like McCartney and LVMH can come in as long-term customers.

We are thus convinced that startups who innovate, build production capacity and can deliver a high quality product at price parity in this space will face a tremendous market opportunity, whilst addressing the gigatonne waste and pollution problems associated with plastic. The combination of these factors is exactly what we look for when making bets, creating investment opportunities across different solutions to the plastic problem.

After a thorough review of the competitive landscape, shown above, and our understanding of the problem-solution set, we have further built conviction that the winning proposition in this space is a combination of: 

1. A rockstar team ready for scale-up
2. A credible platform technology that can develop enzymes for various types of plastics
3. A technical economic analysis (TEA) with a credible pathway towards cost parity with fossil-fuel derived plastics.

SOLUTIONS OVERVIEW: ALTERNATIVE MATERIALS

Next generation alternative materials are sustainable materials that replace incumbents like leather and plastic-based, synthetic textiles, offering an option that decreases emissions and often enables circularity. They can be broadly categorised into sheet-based, protein-based, and plant-based alternatives.

Sheet-based alternatives, such as mycelium, lab-grown leather from animal stem cells, and bacterial nanocellulose (BNC), provide versatile and high-performance alternatives. These materials are mostly grown in batches, with BNC also scalable through roll-to-roll production. They offer high durability, unique customization opportunities, and in some cases, the ability to mimic the appearance and properties of traditional leather. 

Protein-based alternatives use collagen derived from fermentation, waste, or seafood byproducts. These are typically combined with polyurethane (PU) formulations, allowing for roll-to-roll production and compatibility with existing manufacturing lines. These materials are scalable and capable of delivering consistent performance.

Plant-based alternatives, derived from sources such as cactus, pineapple leaf fibers, natural rubber, apple waste, and grain waste, utilise a wide range of natural resources. These materials are often blended with Polyurethane to increase their durability or natural rubber, enhancing their environmental appeal. Across all of these categories, the use of innovative chemistries, advanced processing techniques, and natural feedstocks ensures high potential for sustainability, scalability, and versatility in applications.

Within these categories there are challenges that vary across specific materials. Issues such as batch variability, difficulty achieving consistent thickness and flexibility for demanding applications like footwear, reliance on PU finishes for durability, and limitations in achieving soft or varied aesthetics restrict their broader adoption. Additionally, high production costs, the need for specialized facilities, and scalability constraints pose barriers to commercialization. Startups are pioneering solutions to address these issues. Examples include advancements in green chemistries, bio-based PU alternatives, and innovative processing techniques that are steadily improving material properties, scalability, and environmental performance. 

After assessing each approach and the innovators within them, it became clear that the winning approach needs to be produced within a roll-to-roll textile process. Compared to batch production, roll-to-roll manufacturing increases efficiency, reduces costs, minimises waste, and improves the quality and consistency of materials. It also allows lower CapEx by leveraging contract manufacturing and integrating with existing supply chains. From a cost perspective, it enables higher production volumes at an earlier stage and thus lower price points. 

We consistently heard from industry players and customers that producing roll-to-roll is key to scaling for alternative materials. We also heard a desire for a broad, high-performing product portfolio with varied aesthetics. Bacterial nanocellulose stands as a particularly high contender here, as the production process gives greater control over additives and composition through the formulation and fermentation process. 

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With these learnings and after a thorough review of the competitive landscape, we built conviction that the winning startup in this space will have a combination of the below:

1. A rockstar team who is technical, but still deeply understands the textile end-customer and aesthetics.
2. An alternative material that enables a broad, high-performance product portfolio at scale, whereby high-performance is defined by hitting key material metrics.
3. A TEA with a credible pathway towards cost-parity with leather and fossil-fuel derived synthetics.
4. A roll-to-roll production process.
5. A clear & credible pathway towards eliminating all use of plastic coatings, enabling complete product circularity and winning environmental credentials. 

What’s your take on the future of plastics? Share your thoughts and let us know which pathway excites you most— and why. We’re eager to hear your perspective! Stay tuned as we’ll be announcing exciting investment news in these spaces very soon. 

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