Start-ups developing new sustainable materials like plant-based or lab-grown leathers, silks and furs raised $500 million in 2023, up nearly 10 percent from a year before, according to a report by think tank Material Innovation Initiative published Tuesday.

Investors funnelled more money into the space despite a wider slump that saw venture capital funding fall 42 percent and deal count decline 30 percent, according to CB Insights.

Still, the flow of funds into next-gen materials remains well off the record high of $1.1 billion reached in 2021 and the industry has been rocked by a number of high-profile failures over the last 12 months. Buzzy start-up Bolt Threads said it would stop production of its mushroom-based leather material over the summer after struggling to raise new funds, while Swedish textile-to-textile recycler Renewcell filed for bankruptcy on Sunday.

The industry shakeout has dampened the hype around material innovation, but incoming regulation is expected to ratchet up the pressure on brands to operate more sustainably.

”There will be some bumps, potholes, and even some crash-and-burns. These are not signsof the end-of-days, but signs of a maturing industry,” Material Innovation Initiative advisor Sydney Gladman said in the report.

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