H&M Invests in Reverse: The Fashion Giant Joins Startup’s First Funding Round

H&M continues its entry into the capital of sustainable companies. The Swedish retail giant has participated in the pre-seed funding round of German start-up Reverse Fashion. The company will use the funds raised to develop its technology through Artificial Intelligence and image recognition to automate the sorting of used textiles.

German startup Reverse fashion develops advanced technology for the automatic sorting of used textileswith the aim of supporting the fashion industry’s transition to a circular economy.

“This support accelerates our roadmap to bring automated textile sorting for reuse to the market, reducing the sorting cutoff, improving garment capture and sorting, and improving the recycling of used textiles.n, improving the capture of high-value garments and enabling a selected material flow for specific customer groups,“ said Mario Osterwalder, co-founder of the company.

H&M intends to scale the project for use in its infrastructures

Reverse Fashion, which uses Artificial Intelligence, radio frequency identification and advanced image recognition to automate the sorting of used textiles, has closed its first round of financing, in which, in addition to H&M, the investor group Kisora, a venture capital firm, participated.

“Reverse Fashion’s technology has the potential to unlock high-quality second-hand assortments. We are investing to help scale the infrastructure the industry needs to make circularity work in higher volumes,“ said Laura Coppen, investment manager for sustainable fashion at H&M.

H&M thus becomes an investor in the Berlin-based company founded in 2024 by Mario Osterwalder, Karsten Pufahl and Paul Dörtenbach, which will use the funding to develop its AI Sorting Partner app, as well as expand the research and operations team.

The move aligns with the giant’s latest launch just a few weeks ago. H&M introduced Circ’s recycled fibers in two of its garments for the first time. The U.S.-based next gen materials company is able to separate polyester and cellulose fibers from textile waste to reuse both.