Design
Dec 18, 2023
by Karl Smith
Beyond Bolt: The Future of Material Innovation
by Karl Smith
Dec 18, 2023

BETTING ON A BETTER FUTURE SHOULD BE SAFE. WHY ISN’T IT?

Should one company determine the fate of an entire industry? Probably not. But it can, and very often does. Let’s take a look at the precedent – what we’ll call the Beyond Meat butterfly effect. Every single move the alt-meat outfit makes is not only scrutinized for its own sake, but also extrapolated onto the sector as a whole. If Beyond Meat sneezes, the industry is sick – possibly even dying. 

Why should this be the case? In part, of course, it’s Beyond’s status as a market leader with a global 9.4% share of the plant-based meat sector as of January 2023 – down significantly over the last couple of years, once estimated at 24.5%. But it’s also, perhaps more significantly, because Beyond Meat is a public company – its trials and tribulations are made available for all to see. 

Beyond, essentially, becomes the barometer and the bellwether not because its movements are more meaningful than those of its peers and its competitors but because that data is, as a result of public listing, accessible to anyone who wants to see it – whatever their motivation. 

Now, this was a choice Beyond made – not a choice that the industry made together. In fact, most players in the plant-based market have decided against this move. Not because there are problems with these companies, but because this is a fledgling sector – still heavily investing in R&D, still engaging in necessary trial and error. 

What, in the black and white data of public financial reports for shareholders may look like mistakes – failings, even – are all part of the process. All bumps on the road to establishing not just a viable business but also a viable industry for the long term. 

All of which begs the question: having seen this, having seen what it’s done to the alt-meat industry and to Beyond, why would Bolt Threads even consider doing the same to itself and to the next-gen materials sector? 

It also forces another question: who, knowing all this, would reasonably invest in a company like Bolt Threads

 

WHY DO MOST MATERIAL INNOVATORS STAY PRIVATE? (IT ISN’T ABOUT PROTECTING THE SECRET RECIPE.)

Lisa Morales-Hellebo, Founder and Managing General Partner at REFASHIOND Ventures:

“I think that it has become more the exception than the norm for most startups to seek an IPO, rather than acquisition. When a VC invests, they are seeking an exit event to realize a return for their LPs, which many investors assume will be through Facebook, Amazon, Apple, Netflix, Google, or, nowadays, SHEIN. 

“There is a tremendous amount of pressure on founding teams to deliver for their investors, so it is critical to make sure you are choosing the right investors that may have significant control over the trajectory of your company. Couple all that with materials requiring a longer timeline than pure play SaaS with significant R&D capital requirements to achieve scaled production, and less defined materials acquirers (there is no go to FAANGS for materials, yet); it leaves not many choices other than staying private.”

Beyond Meat isn’t the only case study here. Let’s look at Renewcell – a much better analogue for Bolt, if slightly less well known by consumers at large. 

The Swedish company, known for creating high quality textile materials from post-consumer textile waste – and, of course, for being the first such company to really produce at anything like industrial scale – successfully listed on the NASDAQ exchange back in 2020, eight years after its initial founding. 

Prior to listing, the company closed an “oversubscribed” $5 million USD funding round in June 2019 and had, in total, raised $11 million USD to advance its work – a number which included investment from compatriot fashion giant H&M

By the time of the IPO, it was, by all accounts, considered a sound investment: there was vision, there was product, there was even the infrastructure in place because Renewcell’s process “borrows heavily from machinery already used in the pulp and paper industry.” And, presumably, given such success in drawing funding over its near-decade in business, there was money in the bank to push on with all of these. 

Since that listing, however, things have changed. 

With 10,526,316 new shares offered initially at 76 SEK (Swedish Krona) per share – released on the 27th November and raking in an initial SEK 920 million (circa 90 million USD) – by the 8th of January 2021 Renewcell shares were valued at 300 SEK – a near-quadrupling in value that reflected the company’s status as an innovator and a market leader. 

In October this year, over the course of just one week and having already dropped to 59.15 SEK since the IPO, Renewcell lost an additional 77% of its share value. Today, those shares are worth 9.47 SEK each.

Renewcell has worked not only with progress-focused brands like Ganni and PANGAIA, but also with household names like Levi’s and even Zara. So how did this happen? And could it happen again? 

 

According to the Material Innovation Initiative’s Nicole Rawling:

“Luxury fashion brands believe next-gen is the future. The majority of fashion brands are actively looking to incorporate next-gen materials into their product lines and many have already successfully incorporated these materials, for example Gucci. It absolutely makes sense to invest in next-gen material companies.”

But, with sales down to 11% of production in November 2023, a big part of Renewcell’s woes comes down to poor uptake – an unwillingness on the part of the industry to invest in its product and to divest from its current stock. 

According to Apparel Insider

“In a concerning trading update, Renewcell said that up until the end of September, it had sold approximately 14,400 tonnes of Circulose, its core pulp product. Of this, around a third has been sold to fibre producers with the remainder sold to sales agents and held pending final onward sale.”

Does that sound familiar?

This all bears a stark resemblance to Bolt Threads’ situation. Here is a company, once feted as a game-changer – having worked with and taken no-invest equity deals the likes of Stella McCartney, adidas, and the Kering Group – seemingly destined to bring its mushroom leather material, MYLO, straight into fashion’s everyday vocabulary. 

Bolt even seemed so sure of itself and its place in the future that access to MYLO was handed out as a reward for good behavior to fashion brands divesting from virgin leather.

And yet production of MYLO has been halted altogether at the time of writing

The company has cited a lack of funding opportunities and a lack of large-scale investment from the fashion industry as reasons for the cessation, but Bolt has raised over $470 million USD in Series A, B, C, D and E funding rounds since 2014 and was – before news of its SPAC public offering – valued at $1.1 billion USD. 

According to Bolt, MYLO had been on the verge of commercial scale before falling at the final hurdle. That SPAC deal now values the company at $250 million USD and it’s hard not to see the pattern repeating. 

 

Why might this be? Possibly there’s blame to be placed at the feet of the media and its addiction to celebrity culture. 

Earlier this month, Kylie Jenner received the Wall Street Journal’s “Brand Innovator” award for her fashion label, Khy – launched only seven days earlier (and, coincidentally, debuting in the WSJ). 

A cursory glance, however, turns up no innovation whatsoever. Looking over the material specifications for Khy’s first collection, virgin polyester and polyurethane are present more than any other material. There are no recycled materials, no next-generation materials, no lower-impact processes. 

With the spotlight so readily shined on familiar faces instead of unfamiliar materials, is it any wonder that investors are turned off by the prospect of putting their money behind real innovation when public awareness is so easily diverted and its meaning so recklessly diluted? 

As LN-CC Editor-at-Large and former i-D Fashion Features Editor Steve Salter explains:

“Kylie Jenner walking away with Brand prize at WSJ’s 13th annual Innovators awards, days after featuring on the magazine’s cover is emblematic of where the fashion industry has sleepwalked itself into, where terms like ‘innovation’ lose all meaning. 

Aside from powerful brand amplification, in what world is Kylie Jenner an innovator, especially given the warranted criticisms that surround just-launched Khy? Even before its “affordable luxury” claims were deservedly questioned and its problematic “pu leather, old plastic” product specifications scrutinized, Betsy Johnson publicly accused Jenner of stealing designs. Is celebrity and feed buzz still prized more than anything in 2023? Sadly so, but we should expect and certainly deserve more. 

Increasingly today, brands, publications and institutions alike are all striking exchanges between legitimacy and relevance. All too often, these exchanges inhibit positive progress. This is yet another example of a media institution willingly legitimizing crap in order to curry favor from a world it no longer understands. In an attempt to be relevant today, the WSJ rewarded in order to be spoken about in the same captions. The likes of Kylie Jenner can thrive without legitimacy, publications like the WSJ will struggle.” 

Lisa Morales-Hellebo:

We have achieved maximum hype with the implosions of FTX, We Work, Bored Ape/NFTs, so yes, I am hoping that with a more diverse group of emerging GPs building funds with thesis that live outside the hype cycle, real innovations will not only be rewarded, but will be championed as the best path forward for people, planet, and profits.

Veshin Factory’s Joey Pringle adds: 

“It’s a slap in the face to any innovator, but I think all they can do is laugh at it. To put a different spin on it: if there was anything positive from this, the smallest silver lining, it’s that Kylie Jenner is a so-called “Influencer”. Us visionaries, sustainable enthusiasts & innovators do live in our bubbles for the most part – innovation is nothing too new to us, but to Kylie Jenner’s audience I am sure it’s pretty new territory. It’s raising awareness to the “word,” atleast and – who knows – some kid out there could be the next biggest innovator as a result of learning what innovation is. 

Yes, a slap in the face to us, but it’s a positive if innovation is becoming present in other sectors of society. Which honestly is where the biggest change needs to happen!”

Not the be-all or end-all, perhaps. But where attention goes money surely follows.

Interestingly, though, Bolt also pointed to fickle financing when it came to ending MYLO’s production, suggesting that investors were lured away by fast-progressing sectors like AI. Yet, according to Fashion United, they seem to be alone on that front: 

While the newly formed Arda Biomaterials secured a 1.1 million pounds funding injection in June to support the development of its leather made from beer waste, last year start-up VitroLabs raised 46 million dollars to build and scale cell-cultivated leather alongside Kering and Bestseller.”

Nicole Rawling, CEO of the Material Innovation Initiative:

“Our research shows that next-gen materials will become widely adopted by U.S and Chinese consumers (the largest consumers of fashion products). 90% of US respondents and 70% of Chinese respondents were very or extremely likely to purchase next-gen materials.” 

And what Rawling says is true: Material Innovation Initiative data from earlier this year does point to a positive response from investors:

 

Clearly, then, there’s something amiss here – a lack of trust in Bolt, perhaps, rather than a lack of interest in the material innovation sector as a whole? 

While the downgrade in valuation surely takes into account the removal of MYLO from the equation, does it also take into account a similar volatility for its current flagship, beauty industry-focused B-SILK PROTEIN?

According to Aaron Nesser, founder of Keep Earth Company, the beauty industry is less easily rocked: 

The pivot to focus on silk protein production is smart. I’ve said before that scaling a protein and material businesses at the same time is too complex. Focusing on the protein business is the right move. It is a high-value ingredient and can create value at a smaller scale as a cosmetic ingredient. Once the protein business comes into its own, the materials business will be able to succeed.”

Is it possible, though, that the valuation follows a more counterintuitive line of thinking? 

Does a public offering, ostensibly to raise money, actually put Bolt in further financial jeopardy? Does the potential for black-and-white reporting of its numbers scare investors? With Renewcell and Beyond Meat in the rearview mirror, but not yet at any kind of safe distance, will the markets make presumptions with the material available to them? 

In a sense, it’s a case for large-scale public transparency – if all the information is out there, then there are no assumptions to be made. If that data is shared willingly, without the behest of shareholders, innovators are left to draw funding only when they need it – and only from those who have the stomach to stick it out. 

That Renewcell – after doing the same things in 2022 – this year (prior to its price crash) made share issue moves to raise capital based on its less-than-ideal trading figures and forecasts, is the result of pressure from vested interests as much as a genuine need for dollars and cents. Bolt’s drop in value likely reflects the impact of that pressure. 

It stands to reason, then, were other material innovation companies – like the MIRUM-producing Natural Fiber Welding or the pineapple yarn outfit Piñatex, for example – currently in public holding, they might be pushed to follow suit and questions about their viability would surely follow, flowing down the chain to other companies. As it stands, investors and the media can speculate, but there’s no chain of causation – no share price to tank and take a whole world of dominos with it.

But that doesn’t necessarily mean that other companies are safe: were NFW or Piñatex or MycoWorks or any other privately-held innovation enterprise in need of a fresh funding round, the decrease in value of a prior unicorn like Bolt Threads’ would doubtlessly impact the capital they’d be capable of raising. In turn, fledgling companies would find it harder to raise the kind of seed funding they need to get off the ground. 

Knowing all this, why would Bolt Threads even consider listing?

Surely a company dedicated to progressing next-generation materials and revolutionizing the fashion and beauty industries would see all of this and stay well clear? 

Lisa Morales-Hellebo:

“I’d like to see more materials / next-gen companies going public with the right advisors to ensure they do so at the right time with the right roadmap, rather than as a last resort. We currently have so much wealth held in so few companies, so supporting more IPOs could help to create a path to expanding the pie for the next generation of non-SaaS market leaders.”

Aaron Nesser: 

“I’ve been anticipating this moment with Bolt for a long time. The IPO sends mixed signals. This is one company out of many. It could mean that the company is stabilizing and has found its niche. Their investors might also be pressuring the company for a liquidity event. 

Bolt has made significant changes in their business over the last decade-plus. As an outsider, it’s impossible to know what internal pressures they face. Despite Bolt’s high profile, they are not a bellwether for the industry. Material innovations often follow a winding path.” 

Nicole Rawling: 

“The situation with Bolt Threads is complex and not comparable to Beyond Meat. MII tends to speak about the industry as a whole and doesn’t comment on individual companies. 

We believe that the next-gen material industry is growing and encourage investors to invest in this industry. A growing number of companies and investors already support next-gen materials. We’ve counted a whopping 148 innovators in the space and over $3 billion USD invested in the industry since 2019.” –  Nicole Rawling, CEO of the Material Innovation Initiative 

Joey Pringle

“To most, it looks more like a last ditch effort to salvage what just happened. In the position Veshin is in – as are many others – we desperately need one of these innovators to get the detonator button pressed. It will benefit everyone in the industry. If it goes wrong it will just continue to bring a new wave of negative ripples through the next-gen industry and push the finish line years further back. 

For Veshin, we are at the finish line but we need to drive home seven-figure revenues per year to keep the lights on. Every year that passes without detonation just makes it harder and harder. To be positive, there are next-gen material suppliers out there who are very close to launching their rocket. Our partner NFW is very close, providing they close their next investment round soon!”

For Bolt, then, it may be a necessary risk. Not just to save its own skin, but to provide a catalyst for a sector that may be staring down the barrel of stagnation if it doesn’t get the capital and the airtime that it needs. 

 

The kind of research and development necessary to produce real innovation needs serious capital to keep it moving. That’s for sure. And maybe a public push from Bolt Threads to bring in that money could spark something. If, as Pringle says, it all goes to plan. 

But that’s the thing, isn’t it? Plans are different, depending on who’s making them and on who’s approving them. For better or for worse, innovation often needs to happen behind closed doors – in rooms where mistakes can be made and risks can be taken in pursuit of progress. Not in the court of public and shareholder approval – a place where those same risks aren’t judged by their long-term merit but by their pure, financial potential. 

In this arena, if the plan goes wrong for Bolt, then the plan goes wrong for material innovation. Not forever, but at least for the immediate future. 

Still, with that in mind, there’s one question left to answer: to invest or not to invest?

Steve Salter:

The comparison with Beyond Meat is apt and, as analysts say (at the time of writing at least) it’s entering “survival mode”, and it should provide a reality check. Would I invest? Yes, simply because I’m a dreamer.”

Lisa Morales-Hellebo:

“At REFASHIOND Ventures, Brian Laung-Aoaeh and myself pride ourselves in being an early leader in industrial transformation via investments in data, AI, advanced materials, advanced manufacturing, and next gen supply chains; having started with our The Worldwide Supply Chain Federation community in 2017. We are bullish on investing in hard things, like Simplifyber and Natural Fiber Welding, to name a few advanced materials and advanced manufacturing companies in our portfolio.”

Jessica Appelgren, Marcomms Lead at X, The Moonshot Factory:

“I would and will invest in Bolt. The “real things” are better and cheaper because they are massively subsidized which can’t continue in perpetuity as the world wakes up to the real cost of animal agriculture. The “real thing” when it comes to leather is a byproduct of an industry on the wrong side of balance with planetary boundaries and consumers fundamentally understand that- they are using fashion as a lever for change. I’m in.”

Paul Foulkes-Arellano, Founder of Circuthon Consulting:

“These VC-backed publicity seekers spook investors and take attention away from real growth. Meanwhile big brands and retailers do the real work.” 

Eric Pollitt, President at Global Hemp Inc. & Natural Fiber Welding Co-Founder:

“The truly biobased materials (gimmicks aside) market is in its infancy by comparison to its predecessor petrochemical counterparts. There will be hiccups and failures, but the future is vastly bright!” 

Brett Matthews, Editor at Apparel Insider:

“Why invest in fake leather and fake silk when the real things are far better and cheaper? As an investor, I’d want some robust answers to those two questions because the market always finds you out eventually.” 

Joey Pringle: 

“For me, when it comes to investment, I can only invest in what I see. Being a factory owner I live for transparency and for making decisions based on what I see in front of me. Someone can sell it to me all they want and send me the nicest pitch deck in the world, but I have to see it in person. All my higher level decisions are based on what I see with my own eyes and my intuition. 

So, with this logic, and as much as I’ve wanted to, I haven’t yet seen anything of Bolt Threads in person and I wouldn’t be able to invest in just what I’m seeing in public news. I have to peel back way more layers. 

A company that I would invest in if I had a chunk of change in my back pocket would be Natural Fiber Welding. I’ve been there in person – twice. They walk the talk, and their CEO Luke Haverhals has put himself in the firing line multiple times with questions I need answers to. The company has nothing to hide. It’s extremely motivating & inspiring what is happening out of Peoria, Illinois.”

We need innovation more than ever, but fickle financial markets may not be read and the media, still in thrall to throwaway cultural trends, can’t be relied on as a champion for progress. The future is in our hands.