Natural Fiber Welding, the innovative Peoria developer and manufacturer of sustainable alternatives to leather and plastics, recently announced $15 million in new capital investments.
NFW founder and CEO Luke Haverhals says the new funding – headlined by a major automaker – represents major growth for the company and increased interest in its products.
Reporter Joe Deacon recently spoke with Haverhals about what the latest investments mean for NFW. This transcript of the conversation has been lightly edited for brevity, clarity and length.
Joe Deacon: Natural Fiber Welding recently announced a $15 million round of new investments. How will the company use this new funding?
Luke Haverhals: So, it continues our drive forward on hiring lots of smart people and getting the kind of equipment that we’re looking for to scale up production. So, that’s the primary thing it does. There is some ongoing product development, where you can go to our website and you can learn about Clarus and you can learn about Mirum, and that’s all true. And then I’ll say there’s other things in the pipeline that will also be as big and important in the world, in different applications. So some of the funding goes towards being able to really step on the accelerator and do more of that as well.
Who are some of the major investors in this round? I know, there’s some noteworthy automotive ties to this group.
Haverhals: That’s right. So BMW i Ventures is a headliner, and that is part of a bigger sort of partnership that (we) expect to see a lot more from Natural Fiber Welding in partnership with BMW in the future. There is Advantage Capital (the Community Development Venture Capital Alliance), which I’m not going to pretend to remember the acronym (CDVCA) of the actual vehicle that was in the press release, but behind that was (CDVCA) who anyway is a finance-minded investor, but really interested in creating jobs in places like Peoria, Illinois, so that’s great.
Then I’ll say there’s a number of other institutional investors: Ethos is a Silicon Valley VC (venture capital investment firm) that is already an investor in NFW and they upped further their investment; Prairie Crest Capital is a venture fund out of Des Moines, Iowa, and they were already an investor and they upped with more capital; For Good Ventures is a new fund that invested. I don’t want to leave anyone out, but off the top of my head those are like some highlights that come to mind. Then there are a number of other like individuals and other investors. I could say Smart Shirts, which is a world famous textile mill that already is an investor in NFW, that invested more.
So (it’s) a great mix, I would say, of people and companies and funds that have already believed in NFW some time ago and put in their investments, and then in the case of like BMW and (CDVCA) and For Good Ventures, some folks believe – oh, Evolution VC Partners is another one I was forgetting that’s important from New York City. So some people who believe in the future of what this means and were willing to come in now. So that’s great.
I think you’ve dabbled a little bit in the automotive market before but this is somewhat of a new area for NFW. What additional development potential or opportunities do you see in this area?
Haverhals: So, let’s just say automotive markets in the leather-like material space are very large, and then it takes some time … if you think about a company like BMW, when they sell a car, they don’t want to have a recall on the interior of that car three years down the road. So there’s some testing to get materials qualified. And the other thing that’s true is Natural Fiber Welding’s Mirum materials let those designers of car interiors think differently and get to do new things with our materials that they can’t do with some of the existing materials that are out there.
So there’s a combination of working on the quality and the aesthetics and the design of what BMW interiors look like in the future, and then a certain amount of testing that goes on to make sure that the materials qualify and stand up to wear-and-tear and abuse and ultraviolet light and all those things, those boxes that need to get checked so that when people receive their cars in the future that the materials perform like they should.
A lot of our listeners are familiar with NFW and the products you’re making but can you remind us again what Mirum is?
Haverhals: Yeah, so Mirum is a leather-like material. So in the world today, you can think about wallets and purses and coats and shoes and car interiors. There’s a lot of materials out there that are either made, of course, from animals that are leather, or synthetic leather from plastic, basically. So Natural Fiber Welding’s offering is a natural, you know, all-natural ingredient, leather-like material – but it’s a composite made from plants.
This new funding shows that the company is progressing. What does it say about the future of NFW and the desire for sustainable materials?
Haverhals: Yeah, it’s a great additional validating point that what we’re doing is going to change global business. So for example, if you go look at BMW’s blog and they give a little bit more extra commentary on why they chose to invest in NFW and not some other companies, startup companies and other things in the world that claim that they can make leather-like materials, too, in new ways. And what they point out is: in order to be relevant to the automotive industry – or I could add, be relevant to the footwear industry, etc. – there’s a number of things you have to be able to do.
You have to be able to have high-performance materials; they have to be available at cost points that don’t radically change people’s day, in terms of the price structures that exist today for materials that perform a certain amount; you have to be able to scale those materials, to not just millions, but tens, hundreds of millions, billions of square feet of production to be relevant in those industries.
Then you have to check all the boxes; many materials that exist today that are at a certain performance, are at a certain cost point, are at scale, but they don’t check any of the boxes or enough of the boxes, let’s say, on sustainability, and the cost of resources, or recyclability, etc. NFW checks all those boxes, Mirum checks all those boxes, Clarus checks all those boxes. So that makes these very, very large companies and partners think differently about what their go-forward business strategy is. This is a good validation of all of that.
A lot has happened for NFW in the past year, does this pace of growth seem accelerated at all to you?
Haverhals: Remember that, when you ask me that question, about this time six years ago now, I was jotting my name on paperwork to start a company and didn’t really know exactly what the future was going to be. I thought we had a good idea, but didn’t necessarily know all of this would come to fruition. So for me, it feels like it’s taken forever. But I’ll say it’s really edifying to see the team – especially in the past couple of years, right? – there’s a lot of new faces that have showed up to NFW.
In fact it’s funny, I’m in a company now where there’s more new people in the company in the last nine months or less than were in the history of the company before, for those five years or whatever that proceeded. So I think in some ways, things are coming at me or at the company faster than ever, and that’s great. It’s wonderful to see that kind of like traction in the world and gaining speed. On the other hand, I’ll just say I continue to take myself for a really long, long view because there’s a lot more to come.
I’m sure you don’t want to give any secrets away but what else might be in the pipeline for NFW in the near future?
Haverhals: Yeah, expect to see NFW growing at even a faster rate with more announcements of this sort yet this year. I’ll just say, this general genre of a company growing up, earning more resources from large corporations that want to partner and work with us, and also just continuing to bring in resources for further scale beyond what we’ve talked about. Let’s just say I hope we’re talking in the October-sort of timeframe again about something even bigger.
