LONDON – In response to this excellent article by Tricia Carey & Robert Antoshak on what the fashion industry can learn from Renewcell’s bankruptcy here, I wrote this piece for Apparel Insider. Here, I put myself in the shoes of a would-be investor into the novel recycling space. These are ten questions I would ask companies in this sector which are seeking fresh finance and investment to scale and grow:
- What is the market demand like for your recycled products? If you have run capsule collections with fashion brands containing feedstock from your products, how successful were these in terms of sales and at what price point were garments sold?
- Do you have any legally binding ‘offtake’ agreements for your products? By this I mean actual legal documents which obligate end customers to purchase a certain amount of your product? How likely do you think it is that fashion brands would sign up to such agreements?
- How do your products compare, performance and quality wise, with like-for-like products in the marketplace such as viscose?
- Do you have clearly established feedstock supply chains in place for your recycled products? If not, when will these be definitively in place and which geographic regions will feedstock be sourced from?
- By what year do you expect your products to reach price-parity with like-for-like conventional products such as viscose? Do you have enough money to remain solvent until that time, bearing in mind that total investments in Renewcell were around US$140m?
- Do your recycled products have any lifecycle analysis (LCA) or other environmental documentation to prove their sustainability credentials? More broadly, what specific environmental claims are being made about your recycled products and do they stand up to environmental scrutiny?
- Will any environmental claims being made about your products meet with new and impending anti-greenwashing laws?
- What lessons have you learned from the story of Renewcell and what might you do differently to avoid meeting the same fate?
- What is the pay of your executive team, what is the average salary at your company and what kind of efforts are being made to run a lean business in a sector where profitability will likely be several years away?
- In what year will your company become profitable, and can you share some detailed forecasts as to how profitability will be achieved?
