Meet a sustainable fashion startup backed by H&M and Amazon

As Gilberto Lureiro spent the summer at a textile factory as a teenager raised in Portugal, he discovered that he felt “hate and love” about how clothes were produced.

The work was difficult. Loureiro's job was to spend a long time on fabric defects, running through the machine at a speed of about 15-20 meters per minute.

“I love the textile industry and problem solving, but I hate this… the work of inspection and inefficiency and waste. It's really one of the toughest jobs in the world,” Loureiro told CNBC over a video call.

In the decade since he took on his first shift on the factory floor, Lureiro's mindset changed. After completing his Masters in Physics, he co-founded SmartEx, a high-tech company that uses cameras, vision software and artificial intelligence to find textile flaws during production and thus reduces the proportion of waste. Loureiro claims that the technology is preventing 1 million kilograms of fabric from being wasted over the past three years.

According to the nonprofit Ellen MacArthur Foundation, fashion has the problem of large waste, where large amounts of clothing are thrown away and buried or burned clothing is thrown away or burned. Smartex claims that its defect spotting technology means that it can produce 0.37% of clothing per kilogram of finished fabric. This is added when considering the fashion giant Inditex (owner of Zara) used 678,596 tonnes of raw materials in 2024 in its annual report.

Plus, fashion is an industry that has not yet fully embraced digitalization, Loureiro said. The supply chain can be fragmented for a long time, from growing and processing raw materials such as cotton to weaving and dyeing textiles, designing patterns, and sewing them into clothing, making it complicated to make clothing. At the same time, it is a fast-moving, unpredictable industry.

“If this is the biggest industry that has not yet been touched on [the] It's the internet, one of the world's biggest pollutants, and no one is working on this in terms of technology. [then] According to the EU, Loureiro said there is a big gap here.

The lack of technology in apparel production and the possibility of making the industry more efficient has made SmartEx attractive to investors, Loureiro said. H&M Group I invested in SmartEx in 2022, but Tony Fadell (iPod inventor and Nest thermostat) led the same year with Lightspeed Venture Partners in a $24.7 million investment round. According to Loureiro, Smartex has raised more than $40 million so far, but investors have said they are “brave” to back it up, given the complexity and business of the industry in multiple countries. “It's a great value to capture, so it's a huge risk and a reward,” he added, considering the size of the industry, which is estimated to be worth more than $1.8 trillion in 2025.

Smartex and its famous investors caught the eye Amazonand also invested funds into the company through AWS Compute from Climate Fellowship. It is an initiative that supports high-tech startups in areas such as food security, conservation and climate resilience. Lisbeth Kaufman, AWS Head of Climate Tech Business Development, Startups and Venture Capital, began his fellowship in 2023, with four companies winning the program.

“Climate Tech startups, they have so many R&Ds [research and development] Kaufman told CNBC over a video call. Fellowship companies now have access to AWS experts and advanced computing services, with 20 companies using AWS through AWS this year to invest $4 million.

Loureiro spends a lot of time visiting textile factories, mainly in Asian countries such as Bangladesh and Vietnam, and wants to understand how quickly your investment in Smartex can be repaid.

“If he's not sure about ROI in 30 seconds [return on investment] For example, less than a year later, you're out of the game… you need to prove that they save money with materials, thread or electricity,” Loureiro said. 18 months, according to the Apparel Impact Institute.

The goal of SmartEx is to become a “operating system” for factories throughout the fashion supply chain, allowing brands to track information such as where clothing comes from, where the production process is located, and how much water is used to produce items. “These are basic questions that are very difficult or impossible for most fashion brands to answer,” Roureiro said.

Fadell compares the possibilities of SmartEx appleLoureiro said the software ecosystem. “It's not about computers, Macs, iPhones, AirPods, it's about what they can do together, it creates an ecosystem.