Hearst-backed Level Up Ventures Gives AI-driven Start-up Sortile a Financial Boost

The AI-driven sustainability-focused start-up Sortile has wrapped up nearly $1 million in pre-seed financing, thanks partially to the Hearst-backed Level Up Ventures.

The women-led company is committed to diverting textile waste from landfills through the identification, traceability and recycling of textiles. During a Zoom interview with Hearst executives, Sortile’s cofounders Constanza Gomez and Agustina Mir discussed how the capital will be put to use.

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Launching in August 2021, Sortile is rooted in fiber recycling and data transparency. The company has plenty of textile waste to try to address, considering that an estimated 13.1 million tons wind up in landfills in the U.S. annually.

”While collection today is only 15 percent, it is a little higher than in the last two years,” said Gomez, adding that Sortile and similar technology should boost that figure and incentives such as public policy and consumer pressure.

In response to clients’ interest in limiting the environmental impact on other countries, where sorting and grading are conducted, Sortile has been expanding its data transparency beyond fiber-to-fiber recycling. The company has five full-time employees and two part-time ones. The aim is to finish the year with eight to 10 new employees.

Launched in the fall of 2021, Level Up has a lot of support from the highest levels of the Hearst organization. On average, Level Up Ventures offers $300,000 to the companies that it supports, according to managing director Shashi Srikantan. While there is not a targeted number of companies to bring on board, the team has been encouraged to find “great companies that fit Level Up’s criteria” to bring them to the Level Up investment committee for review, she said.

“Venture capital is a waiting game. On the early side, you are talking three years. These are definitely long-term relationships. We would expect that just in line with the industry that we would be involved for the next three, five or seven years until the company exits. That would be through an acquisition or an IPO,” Srikantan said.

Sortile was compelling for several reasons, including the founders’ complimentary skills, passion about the problem, how the company’s technology is addressing bottlenecks, leveraging data and what a huge market there is to improve textile waste. “It’s also an exciting time in this space. There’s a heightened focus by consumers on sustainability. Regulatory tailwinds are working in their favor,” Srikantan said, adding that retailers are being forced to shift to a more circular economy.

While Gomez’s background is more on the technical side and in product development, and Mir has more industry experience and sales know-how, the pair said they are gaining knowledge about what goes into running a business, such as good marketing and sales strategies, among other things.

Acknowledging the complexity of the problem of textile waste, Gomez, who serves as chief executive officer, said there is a need for public policy to play a part in the strategy. Another challenge is the fact that while many brands want to be sustainable, they need to manage their costs and, depending on technology and material, recycled materials often can be between 20 percent to 40 percent more expensive than virgin materials, Gomez said. However, the more companies that invest in recycled fibers will result in a decline in those costs.

Sortile’s objective is to have more than 100 clients by the end of the year, compared to 10 now. Declining to identify any of its clients, Gomez said the largest one is a leading domestic clothing collector.

The founders first met at Columbia University as graduate students. Gomez’s presentation about textile waste caught the attention of Mir, who insisted action was needed more than research. They started consulting with a few firms and the interest “snowballed” from there, said chief operating officer Mir.

“Our interest comes from a personal level. We were very passionate about finding a solution to this problem, prior to meeting each other,” she explained.

Both founders are from Chile and speak Spanish but neither realized that for about a month after meeting, Gomez said. As for why fiber transparency and recycled fibers remains a hard sell for many companies, she said it often comes down to the increased costs and the need to change sourcing — a challenge especially for larger corporations. However, having companies like H&M and Inditex invest in the space helps “start pushing so these barriers that exist start coming down,” Gomez said.

The idea that a few fast-fashion retailers are now trying to correct a problem that they helped create — excessive textile waste — is a valid argument, according to Gomez. “At the same time, these companies aren’t going to cease to exist. Yes, they absolutely created this problem. That’s why policy is so important, because it will push [change] faster,” she said. “We also have to be extremely careful about overproduction. What we don’t want is the claims of recycled fibers to be used as an excuse to keep overproducing.”

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