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This is Capitalism: Up Close, Inspired, Explained

Jan 2, 2020

Karla Mora fully expects to have a major impact on the apparel industry, the clothes we wear, and where we dispose of those clothes after we wear them. She is a self-described impact investor, and her venture capital fund, Alante Capital, co-led by former JP Morgan executive, Leslie Harwell, and backed enthusiastically by women’s fashion legend Eileen Fisher, is investing in a future in which landfills won’t be overloaded with yesterday’s throwaway polyesters — meaning a future of sustainable apparel. Alante Capital is investing in young companies that are offering a better process for making and re-making apparel. The road that Karla Mora took to this went by way of a United Nations Compound in Kabul, Afghanistan and a neighborhood in Costa Rica, Barrio Escalante. Listen in for her story.

Key Takeaways:

[:23] Ray Hoffman introduces Karla Mora, Founder and Managing Partner of Alante Capital.

[1:14] Karla Mora’s background was in international political economics and improving livelihoods in emerging markets. She worked for a while at the UN, looking at inefficiencies in the coffee sector, then Peace Dividend Trust (Building Markets), to build vibrant ecosystems where people can lift themselves out of poverty.

[2:06] In Kabul for six months, Karla collected data and wrote a report. She returned to California to finish writing the report. She ran into a person running an impact investment fund and she was inspired to start a fund in 2012 to invest with purpose.

[2:44] Karla describes the challenges of living in Kabul. She was not able to exercise outside, but the Afghan people were amazing and resilient.

[3:57] In Karla’s off hours, she kept in touch with an agricultural investor in New York who was helping small farmers reach farmer’s markets in communities without access to fresh food. She worked with him every evening while her days were spent working on the Kabul impact report.

[4:33] Karla enjoyed back-country skiing in the mountains in Bamyan, Afghanistan.

[5:28] Karla came up with the name for Alante Capital while she was living in Barrio Escalante in Costa Rica. Alante is Spanish for moving forward. It took Karla about a year to make the decision to move forward with Alante Capital.

[6:35] Karla started the idea that became Alante Capital with a friend from San Francisco. They both were in impact investing and they talked about starting a fund in fashion. They studied the idea for about eight months but didn’t launch it together as they were in two different geographies and had different ideas.

[7:03] After all her research, Karla had fallen in love with the concept and the industry. She knew she wanted to move forward. She had already been introduced to Leslie Harwell by a graduate advisor. Karla and Leslie had also been at JP Morgan. They became fast friends and thought partners.

[7:32] Karla’s husband noticed how Karla felt when she got off the phone with Leslie and he suggested they partner to achieve their goals. Karla wrote a job description for Leslie and convinced her to leave the bank and work with Karla.

[7:46] Leslie had been at Credit Suisse for years and had moved to JP Morgan because of her passion for impact investing and social finance. Leslie had been observing a trend of industry-specific systems-change funds starting up. She had not seen one in apparel. When Karla showed up with her idea, Leslie was excited to get started.

[8:21] Alante Capital began in Costa Rica. Her husband consulted with her on the ideas and put data in spreadsheets for her. As a new wife starting a new financial venture, it was a scary time for Karla. She made sure not to make decisions based on fear. She kept seeing signals from the industry that she was on the right track.

[9:18] After starting Alante Capital, Karla and her husband moved back to California. About a year ago, Karla became pregnant. Karla came off maternity leave two months before this interview. Then they had their first close for the fund and their first investment. It was a busy and exciting time. Every day is a juggling act for Karla.

[9:53] Karla and Leslie are on opposites sides of the country. They had done so much pre-planning work together that once they joined forces, they had a great rapport. Leslie came to Santa Barbra for a few months at the beginning to work side-by-side with Karla. That’s when they brought on their anchor investor, Eileen Fisher.

[10:20] Karla and Leslie message each other and talk throughout the day, as though they are in the next room from each other. They may exchange hundreds of messages in a day, chatting while they’re working. They feel very engaged with each other.

[10:48] Eileen Fisher is their anchor investor and general partner. She was a critical part of getting the fund launched. Leslie knew someone at JP Morgan who was working with Eileen to help her put her capital into investments for the sustainable apparel industry.

[11:08] When Karla sent out an announcement about Leslie joining the team, it circulated and was shared with Eileen who saw it as the investment she had been seeking. It was humbling and exciting for Karla and Leslie that a major figure in apparel was interested in their startup.

[11:99] Karla and Leslie had been looking for funding for their startup. They had a list of potential general partners and Eileen Fisher was number one on their list.

[12:02] Alante Capital works very closely with large brands. When consumers race to find the cheapest products possible, brands are under a lot of pressure to provide them. Polyester is cheap and it ends up in landfills.

[12:30] Alante Capital just invested in Mango Materials, a company started by two women from Stanford who figured out a way to create a biodegradable polyester fiber that’s not made from plastic. It breaks down in the environment.

[13:00] Tyton Biosciences is another company in which Alante Capital has invested. They break down polyester-cotton blended garments using a clean process. About 80% of clothing is a cotton-poly blend. Brands can use the fibers from this process again in new clothes.

[13:34] Karla sees a good level of scale in each of these companies within three to five years. At that point, there will be a couple of directions to take to accelerate their scale greatly.

[13:51] Karla predicts that in 18 months to two years, we will start seeing collections of clothes made from post-consumer garment waste — old clothes.

[14:09] Alante Capital is looking at about 140 companies that fit squarely into their thesis. As their first two investments are in fibers, next, they are looking at the garment rental and resale industries. Karla likes to talk to companies in the early stages. If it’s not a fit, she wants to let them know as early as she can.

[15:03] Sustainability is the direction the industry is taking. You can see articles in industry and mainstream media every day talking about sustainability in fashion. It’s driving more investment of capital and time into investment practices, new consumption models, and sustainable production.

[15:47] The big brands will be a major part of the solution. Karla goes to them in the spirit of collaboration with an approach of being helpful in achieving their sustainability goals. She seeks to understand the true operational hurdles they face in doing so. Then, she introduces them to startups that will help them achieve their goals and innovate.

[16:30] Conversations with brands often go into what rental or resale can do to decrease waste and dependence on virgin fibers. Brands like working with Alante Capital to help them think outside the box. Alante Capital is up-to-date on the newest innovations. Alante Capital can help drive early interactions between brands and startups.

[16:53] Karla loves working with brands because she gets to learn about the companies in the pipeline, and figure out which ones are viable and solve problems identified by the market.

[17:15] Karla talks about the five-year outlook for Alante Capital. She hopes for a portfolio of 15 companies. In five years, the apparel industry will have made significant improvements in the use of recycled fibers. All brands are looking at recycled fibers. Consumers will see lots of recycled fabric garments in the stores.

[17:52] Karla expects over the next five years to have the security that comes from leaving startup mode, knowing her company is funded, operational, and successful, including having a set salary and the ability to make plans and control her schedule.

[18:15] Karla Mora is Capitalism. Alante Capital is capitalism.


Mentioned in This Episode:

Karla Mora

JP Morgan

Alante Capital

Leslie Harwell

Eileen Fisher

United Nations Assistance Mission in Afghanistan

Barrio Escalante, San José, Costa Rica

Peace Dividend Trust (Building Markets)

Bamyan, Afghanistan

Credit Suisse

Santa Barbara

Mango Materials

Tyton Biosciences

LA Times

NY Times