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Material Scale: Bridging Buyers and Material Startups
18 Feb
Summary
- New funding model targets materials startups struggling to scale.
- Ralph Lauren joins as an anchor buyer for early-stage climate tech.
- The platform uses debt-equity to fund production with guaranteed orders.
Startups that have successfully created prototypes often struggle to scale production, a hurdle known as the "valley of death." This challenge is particularly acute for companies producing novel materials, as unlike software companies, they cannot operate at a loss during initial scaling. Josh Felser, co-founder of Climactic, has launched Material Scale to address this issue.
Material Scale utilizes a hybrid debt-equity investment vehicle. It pairs climate tech startups in the apparel industry with buyers willing to commit to bulk purchases. These commitments cover the material costs, while Material Scale provides the additional funding through loans and warrants, making it minimally dilutive for the startups.
Ralph Lauren is participating as a buyer in the initial launch, providing a significant boost to the platform's credibility. The first special purpose vehicle for Material Scale totals approximately $11 million, with plans to expand into other sectors and eventually reach nine figures, fostering innovation in climate solutions.
