Portfolio Spotlight: Keel Labs

Portfolio Spotlight: Keel Labs

In the final part of our June blog series dedicated to the opportunity of Ocean-Based Investing (check here for Part One, Two, and Three), we’ll be spotlighting another one of Third Nature Investments’ portfolio companies – Keel Labs!

For all its beauty and luxury, the fashion industry has an ugly environmental reputation.

Clothing is often made from natural materials, like cotton, leather, linen, silk, and wool, which wreak significant environmental havoc. For example, producing a single cotton T-shirt consumes about 2,700 liters of water, while cotton farming alone accounts for 16% of global insecticide use. Wool is not much better, with sheep farming contributing heavily to land degradation and releasing substantial methane emissions, a potent greenhouse gas. Similarly, viscose (also known as rayon) is a semi-synthetic material made from wood pulp. Though touted as a more sustainable alternative to cotton, its manufacturing process is still incredibly energy and water intensive and releases toxic chemicals that harm both textile workers and surrounding communities, not to mention it contributes to severe forest depletion.

In recent years, the industry has been adopting different materials -- but not for the altruistic reasons you might be thinking. On the contrary, fashion manufacturers have discovered a way to boost their bottom line by adopting synthetic fibers (i.e. petroleum-based plastics) to cheaply mass-produce low-cost clothes and ultimately prop up the fossil fuel economy. Enter: fast fashion.

Fast fashion is a double-edged sword, tantalizing consumers with the allure of trendy, affordable clothing while exacting a devastating toll on our planet and society. On one side, it democratizes fashion, making it possible for anyone to wear the latest styles without breaking the bank. But flip the blade, and you see the dark underbelly. 

Creating plastic for textiles involves extracting and processing large quantities of fossil fuels. The production and transportation of plastic for clothing are energy-intensive, and every year the fashion industry consumes 342 million barrels of petroleum to manufacture plastic-based fibers like polyester, nylon, and acrylic. The industry feeds off an insatiable cycle of overproduction and overconsumption, contributing to colossal carbon emissions and exhausting precious natural resources and creating extraordinary waste pollution on land, in water, and even in our air. Moreover, the human cost is staggering, with workers in developing countries toiling in hazardous conditions for meager wages to meet the insatiable demands of the global market. Fast fashion's seductive appeal masks its true price — resource depletion, carbon-intensive production, worker exploitation, environmental destruction, and an unsustainable future.

Given our firm’s deep history and experience as a food systems investor, we see a striking parallel between the fast food and fast fashion industries, specifically the immense negative externalities that come from a petroleum-based industrialized economy. Both industries contribute to expansive plastic pollution, waste creation, and resource depletion – yet it’s the commons that suffers. Just as we were trying to displace a petroleum intensive system in food, we see the same opportunity and need in fashion.

Fashion’s plastic takeover

Today, petroleum-based synthetics account for nearly 70% of all fiber production. Meaning, nearly 100 billion items of clothing are produced each year, and around 70 billion are made of plastic. When you look at the tags on your clothes and you see the word “synthetic,” that means at least some part of the material is man-made, typically plastics like polyester or nylon. According to Georgia Rae-Taylor, sustainability strategy director for environmental consultancy Eco-age, polyester and nylon account for 69% of all the materials used in clothing globally and that number is expected to increase to 75% by 2030. These materials (unsurprisingly) typically wear down rather quickly (intentionally, fueling a vicious cycle where consumers have to keep buying more), and are thus discarded and often end up in landfills and/or polluting our air, soils, waters, and oceans. 

Further, every time synthetic clothing is laundered, it releases hundreds of thousands to over a million tiny plastic microfibers into the wastewater, which ultimately flows into natural water bodies, including lakes and oceans. Most washing machines and sewage systems are unable to filter out these microfibers. Laundry alone is estimated to be responsible for 35% of the global microplastic pollution in the oceans. The ingestion of microplastics has devastating effects on marine life, leading to starvation, endocrine disruption, stunted growth in some species, and severe damage to digestive systems. Meanwhile, the ingestion of microplastics by humans is a growing concern due to its potential health effects, potentially damaging cells and tissues, exposing us to harmful chemicals, and even impacting our immune systems. 

You might be wondering, what about recycling? And it’s true, companies like Rent the Runway, Nuuly (by URBN), Lululemon, and Express are all investing into more circular business models, seeking to reduce waste and new production. But it's not enough. The problem is much too entrenched and complex to fix via merely reusing clothes. We must disrupt the industry from the very onset -- in the way products are designed and manufactured, specifically the base materials.

Innovative startups, like our own Keel Labs, are meeting this moment, designing more sustainable, bio-based materials to fuel the future of the industry -- to displace some of the most pervasive and damaging materials while maintaining the same performance qualities that consumers demand. And once again, the ocean presents an incredible opportunity for innovation. 

Co-founders Aleks Gosiewski and Tessa Callaghan

Keel Labs: “Harnessing the power of the ocean to create materials”

Based in Morrisville, North Carolina and founded in 2017 (originally as AlgiKnit), Keel Labs is a sustainable materials company, built on the thesis that materials should be regeneratively grown from renewable sources, and created without environmental harm. The company was founded by Tessa Callaghan and Aleks Gosiewski – who were both recognized on Forbes’ 2022 30 Under 30 List – as design students, seeking a way to tackle the issue of textile waste in the fashion industry. They decided to create a solution to the fundamental root of the issue: the materials.

Kelsun™ fiber is the company’s flagship product, a seaweed-based fiber with a significantly lower environmental footprint than legacy and synthetic fibers, making it a powerful alternative to conventional materials that deplete resources and are harmful to our planet. To produce Kelsun, harvested seaweed undergoes a process to extract the biopolymer, which is then mixed with unique additives and water to create a solution. This solution undergoes polymerization, forming thousands of delicate filaments that are stretched, rinsed, and finished before being dried and spun into spools of Kelsun™ yarn. 

Spool of seaweed-based fiber, Kelsun

Not only is seaweed (macroalgae) one of the most regenerative crops on the planet – which makes it an ideal base material – unlike other biomaterials that could be used for textiles, seaweed doesn’t require pesticides, fresh water, or cause land degradation. Compared to cotton, Kelsun uses 100% less pesticides and 70x less water, and is highly compostable. Keel Labs’ materials are designed to fit into existing infrastructure and supply chains, allowing manufacturing to scale. 

And they’re earning attention from some of the biggest names in fashion. In 2023, Keel Labs launched its first brand partnership with Stella McCartney, debuting Kelsun™ fiber on the runway during Paris Fashion Week. Stella McCartney is one of the earliest adopters of biomaterials in the fashion industry, and together they’re dedicated to transforming the industry by driving forward ocean-inspired innovations to reduce pollution.

Keel Labs is a pioneering case study for how to harness the economic value that lies in the ocean. Leveraging biomaterials like seaweed in fashion is a game-changer, slashing water usage, microplastic pollution, and chemical dependency while reducing the industry's carbon footprint. This innovative approach not only improves planetary health, but disrupts a massive industry and paves the way for a sustainable future.

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