06 Dec Fibers Fund Blog
Fibers Fund
Interview with Sarah Kelley and Teju Adisa-Farrar;
Co-Managing Directors
Jen: How was Fibers Fund Created?
Sarah: Fiber crops are an integral part of agricultural systems with critical impacts on land use, soil health, communities and economic development. The current global textile industry is built on exploitation of ecosystems and people of the global majority. Yet the textile and fiber sector has received little attention from investors. Fiber producers and entrepreneurs across supply networks struggle to access capital to meet the growing demand for sustainable, regenerative textiles.
To address this gap, the Fibers Fund has been co-developed by Sustainable Agriculture & Food Systems Funders (SAFSF) and Fibershed, along with Mission Driven Finance (MDF) as our implementation partner. The SAFSF Fibers Roadmap outlined capital gaps and showed that fiber system investments must be backed by a systems-change approach. Simultaneously, Fibershed’s Regional Fiber Manufacturing Initiative (RFMI) provided a deep understanding of capital gaps faced by U.S. fiber producers and processors, and the wraparound services they need to create both financially and environmentally sustainable businesses. Our learnings inform the Fibers Funds integrated capital strategy.
Jen: How are your investment funds catalytic in a way that is different from other funds?
Teju: The Fibers Fund is designed to be catalytic by taking a holistic approach that helps fiber entrepreneurs receive the right-size capital and targeted support that they need to grow their business. We believe providing wraparound services, technical assistance (TA) and integrated capital to fiber producers and entrepreneurs builds their capacity to obtain fair contracts with brands, access additional capital, and generate sustainable livelihoods. To us, being catalytic is aligning the scale with the entrepreners’ vision for their business and its place as part of a community and bioregion.
As global and domestic demand for “eco-fibers” grows, so do investment opportunities in this space. This demand is projected at 4.6% CAGR from 2020-2027, outpacing overall industry growth. Additionally, consumers are seeking products made with ecologically minded practices, given the growing awareness of the mainstream fashion industry’s contribution to the climate crises. Unsurprisingly, brands are recognizing this shift and reassessing their sourcing / supply networks. The Fibers Fund focuses on opportunities that move the needle on these trends to build equitable, regenerative textile economies that support healthy soils and value people. This holistic approach is central to what makes us catalytic.
The entrepreneurs and businesses we serve are focused on creating transparent, ecologically-centered supply networks. Like the Fibers Fund overall, the businesses we have relationships with represent a vibrant and under-recognized part of the U.S. agricultural sector that—if adequately supported—can transform the broader fiber and textile industry towards a more sustainable future. Examples of pipeline businesses include the 12 Fibers Roadmap Case Studies, which include Native-led, woman-led, veteran-led, and family farm businesses across the U.S. Fibershed maintains deep relationships with fiber farmers and entrepreneurs, along with my work to reclaim fiber and textiles legacies for Black and Indigenous creators / makers that have been exploited and undervalued in this sector.
Jen: How do you describe the kind of non-financial returns the fund offers?
Teju: Our values of environmental and social equity are the drivers for impact. The Fibers Fund will offer pathways for investors to support rebuilding the domestic soil-based natural fibers industry. This can unlock potential for sustainable land management, increase awareness of plant- and animal-based fibers as an integral part of regenerative agriculture, and address animal welfare issues that are often overlooked. Additionally, supporting regional economic development for the communities in which the businesses are situated, and increasing business acumen for small producers and entrepreneurs are key impact intentions for the fund. Overall, we hope to accelerate the growth of vibrant, equitableU.S. natural fiber businesses and supply webs based in balanced ecosystems.
Jen: Can you describe how you use integrated capital to do your work?
Sarah: The Fund will utilize an integrated capital approach, offering grants for technical assistance of up to-$25K, forgivable loans, and/or low-interest term loans to entrepreneurs across supply networks working with soil-based, natural fibers, and plant-based dyes. This structure allows us to meet businesses where they are and provide bridge support to those not yet ready for term loans or other types of investment.
In addition to capital, the Fibers Fund strategy provides consistent TA and wraparound services. Many fiber entrepreneurs we are working with do not yet have the support they need to grow sustainably. This integrated and catalytic model allows fiber entrepreneurs to scale to a level where they can obtain other types of financing. As we have rolled out our business TA grants in 2023, we’ve seen that fiber businesses are seeking these grant funds to meet many business needs that are difficult to meet through other sources–things like securing technical TA to evaluate new product lines, completing legal paperwork to allow increased fundraising, completing R&D and filing patent applications, obtaining fractional controller services, or simply incorporating and separating their business from their personal finances. We’re really optimistic that our integrated capital approach will help these businesses be ready to access the right kind of capital to take the next steps in their business.
Jen: How do you address racial justice, income inequality, and/or gender justice through your products and services?
Teju: The Fibers Fund acknowledges the inherent historical and current issues of environmental, racial, and economic injustice in the textile industry. We acknowledge that working in land-based industries can further inequity considering that land in the U.S is disproportionately owned by White people and large corporations. As a result, I designed the Black Fiber Cohort (BFC) within the Fibers Fund to specifically support small businesses and individual entrepreneurs in this space. The BFC provides a grant, relevant business TA, and capacity-building workshops for emerging Black fiber entrepreneurs and sustainable textile businesses.The BFC creates bridge support for these entrepreneurs to be better positioned to receive other types of capital in the future; essentially building a bridge to the pipeline. This initiative hopes to address some aspects of exclusionary financing practices and the lack of representation in the sector by uplifting these businesses to be meaningfully included in fiber and textile value chains. In addition, our governance model is aimed at shifting decision-making power by including those excluded by the industry’s extractive practices.
Jen: Can you share with us an example of an investment?
Sarah: One specific business that exemplifies our goals and values is Botanical Colors, which is a natural dye business in the Pacific NW led by Kathy Hattori. Our fund partners have been in dialogue with Botanical Colors for a number of years–both through their work with Fibershed’s RFMI and their Case Study in the SAFSF Fibers Roadmap–and we were very happy to count them among the first 5 business TA grant recipients from the Fibers Fund. They will be using their business TA grant to strengthen their data management systems, allowing them to generate financial projections that will in turn help them secure fair contracts and future financing. They also recently moved into a new, larger space and are working on infrastructure expansion to meet the demand for their services from both apparel brands and their thriving online dye sales business.
Jen: How do you think about risk?
Sarah: We focus on the fact that these businesses are resilient. Having survived in the competitive, outsourced, underinvested domestic textile industry is no small feat. First, we will measure success by investees’ ability to create sustainable economic models that allow their businesses to grow, receive contracts, and obtain additional financing in the future—without the fund as an intermediary. Success will further be measured by the impact for the communities the SMEs operate in, and the quality of livelihoods for owners along with their employees. In the face of global supply chain shocks and an unsustainable, extractive global industry that is increasingly being scrutinized by investors and regulators, we believe that what is risky is not investing in domestic, soil-based natural fiber and textile businesses that are building a resilient and regenerative future. What’s risky is ignoring the small and mid-scale businesses who are contributing to liveable, thriving futures centered in fiber and textiles—among the most ubiquitous materials in our lives.
What’s on Sarah’s Mind?
Book: Alma W. Thomas: Everything Is Beautiful
Song: Criminal by Fiona Apple (what our daughter is working on in her bass lessons . . .)
Podcast: The Road to Repair and Arsenal French Club
What’s on Teju’s Mind?
Book: Afterglow: Climate Fiction for Future Ancestors (Grist anthology)
Song: Justice by Sevana
Podcast: We Can Do Hard Things