Meet the AWS & H&M-Backed Tech Startup Cutting Fashion Waste

As a teenager, Gilberto Loureiro worked in a textile factory during his summer holidays.

Those formative experiences monitoring fabric for flaws created what he describes as a "hate and love" relationship with clothing production.

Years later, armed with a physics master's degree and an entrepreneurial spirit, Gilberto founded a company called Smartex that could one day render his old labour-intensive summer job redundant by automating the process entirely.

Under Gilberto's guidance, Smartex has developed cutting-edge AI-powered camera systems that can identify defects in textiles during production.

It's a technology that could save manufacturers from wasting both fabric and money.

As such, Smartex is a compelling proposition for investors. Gilberto and his team have already earned the backing of major industry players including Amazon, H&M and iPod creator Tony Fadell to help the company scale.

Tackling fashion's environmental impact with tech

The fashion industry's environmental footprint is staggering, with approximately one truckload of clothing discarded every second through incineration or landfilling, according to research conducted by the Ellen MacArthur Foundation.

Smartex's technological solution combines advanced computer vision, specialised cameras and artificial intelligence algorithms to detect imperfections that human eyes might miss.

The system enables production of 0.37% more garments per kilogram of finished fabric - a seemingly modest improvement that translates to significant savings for industry giants like Inditex, which processed 678,596 tonnes of raw materials in 2024.

The company reports its technology has prevented a million kilograms of fabric waste in just three years of operation.

Behind the investments

The fashion manufacturing sector's relatively slow adoption of digital technologies has created a substantial opportunity for innovative tech solutions.

"If this is the largest industry that is still untouched by [the] internet and is one of the largest pollutants in the world, and nobody is working on this in terms of technology [then] there is a massive gap here," Gilberto explained to CNBC.

This untapped potential has attracted prominent tech investors, including iPod inventor Tony Fadell, who spearheaded a US$24.7m funding round with Lightspeed Venture Partners in 2022.

H&M Group became an investor that same year, while Amazon Web Services provided backing through its Compute for Climate Fellowship program.

When announcing its partnership with Smartex, H&M said: "Their vision of enabling industries around the world to produce with significantly less waste aligns perfectly with H&M Group's own commitment of leading the change to a better fashion future."

To date, Smartex has secured more than US$40m in investment, positioning the company for significant expansion.

AWS's role in scaling Smartex

In November 2024, Smartex was selected as a recipient of Amazon Web Services' Climate Fellowship programme, providing the company with access to sophisticated computing infrastructure and technical expertise.

AWS's scheme aims to address some of the unique challenges that climate tech start-ups often face.

"Climate tech start-ups, they have so much R&D that they need to do, maybe even more than standard tech companies, they have to invent new science or new technology, as well as new business models," says Lisbeth Kaufman, Head of Climate Tech Business Development at AWS

This year's programme is set to support 20 companies with a combined investment of US$4m.

Providing a strong ROI for manufacturers

Convincing traditional textile factory owners to adopt new technology presents its own challenges. Loureiro frequently visits manufacturing facilities across Asia, particularly in textile powerhouses Bangladesh and Vietnam, where factory owners demand clear evidence of rapid return on investment.

"If in 30 seconds he's not convinced about the ROI, in less than one year, for example, you are out of the game," Gilberto told CNBC.

"We need to prove to them that they will save in materials, in yarn or in electricity."

Factory technology upgrades typically require investments of hundreds of thousands of dollars, with ROI periods averaging between nine and 18 months according to Apparel Impact Institute data.

Looking ahead, Smartex aims to evolve beyond defect detection into becoming a comprehensive "operating system" for fashion manufacturing facilities.

This expanded platform would enable brands to track garment origins, monitor production stages, and measure water consumption throughout the manufacturing process.

"These are basic questions that are very difficult or impossible to answer by most fashion brands," Gilberto explained to CNBC.

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