Despite growing consumer interest, VC investment into European impact fashion startups was severely impacted last year, with a drop from €272m in 2019 to an estimated €97m in 2020, according to @dealroomco.

Has Covid damaged the rise of impact fashion in Europe?Our analysis

1/ After a sharp increase in 2019, investment in Europe’s impact fashion startups — who want to make the fashion industry more sustainable, was 3x lower in 2020.

Europe’s fashion startups also saw a drop in VC funding from €797m in 2019 to an estimated €524m in 2020:

2/ A few European impact fashion startups still managed to raise capital, but the top rounds of 2020 were still low compared to other tech sectors:
@vestiaireco €59m
@OtriumOfficial €24m
@MaterialXchange €5m
#BeyondLeatherMaterials €1.1m
@joinourco €0.54m

3/ Although Europe is home to many fashion hubs like Milan, Paris and London, investors felt more confident about investing in the impact fashion industry in Canada and the US: the flow of investment was less disrupted than in Europe.

4/ From the disruption of the global supply chain to a massive drop in profit, the global pandemic took its toll on the overall fashion industry, according to @BoF and @McKinsey’s latest report on the state of fashion in 2021.

5/ But the impact of fashion is still present in consumers' mind: 66% of consumers said they would stop or significantly reduce shopping from brands mistreating their employees or suppliers:

6/ “The market opportunity for sustainable brands is expanding and there’s a higher demand for second-hand clothing and sustainable fashion overall,” says @MattCristal, @dealroomco’s impact specialist.

7/ As many European countries are still in lockdown at the moment, fashion executives think the pandemic is their biggest challenge of 2021. They see a growth opportunity in digital — and some in sustainability:

8/“There’s been a big boost in impact fashion in 2020, a lot of big brands like @gucci have reduced their collections to two per year,” says Melanie Mollard from @heuritechdata. But she remains “on the fence” about fast-fashion brands like @hm launching sustainable collections.

9/ It looks like 2021 will be a defining year for impact fashion, and we will see whether investors will follow consumer trends

How do you think Europe’s impact fashion sector will evolve in 2021? @FraMazzarella @PoloVillaamil @karlitapita @ShankarSharvari @NinaSkarra