Seaweed fabric pioneer Keel Labs files for bankruptcy protection

Keel Labs, the US startup behind the first fabrics made from seaweed, filed for Chapter 11 bankruptcy protection with the North Carolina court on June 5. The company has an estimated ten million dollars in assets and one million dollars in liabilities.

To produce Kelsun, biopolymers are extracted from seaweed and converted into threads through a chemical process. These threads are then spun into fibres. Keel Labs describes Kelsun as a “plug-and-play integration”. The material can be knitted and woven, and blended with other fibres such as cotton or hemp. In 2024, the innovation earned the company the ‘Innovation Project of the Year’ award at the Textile Exchange Climate & Nature Impact Awards.

Founders Tessa Callaghan and Aleksandra Gosiewski started in 2017 in a small laboratory in Brooklyn. Then operating under the name AlgiKnit, their mission was to introduce ocean-derived fibres into the polluting fashion sector. In 2022, a significant growth spurt followed thanks to a Series A investment of 13,000,000 dollars from investors including Collaborative Fund, H&M Co:Lab and Horizons Ventures.

Almost a decade later, the founders seemed to have proven that seaweed can be an excellent raw material for clothing. After the Covid-19 period, Kelsun's profile grew rapidly through collaborations with major names. For instance, Kelsun created a fine-knit tank top for Stella McCartney (2023); a cotton shirt from the Californian brand Outerknown (2025) contained one-third Kelsun; and finally, H&M and & Other Stories (2025) released a capsule collection featuring the material.

In 2024, in an interview with FashionUnited, the company expressed its satisfaction at having overcome the most difficult growth phases of a scale-up. Garments featuring Kelsun entered the market in batches of over 100 units at a competitive price point. The “next-gen”, sustainable material seemed ready for the mainstream fashion system.

While the current bankruptcy filing does not necessarily mean Keel Labs is ceasing operations, it does raise questions. What is needed to run a viable business in the alternative fibre segment? How can a small company produce scalable, high-quality, lower-impact fibres while simultaneously maintaining a healthy cash flow?

This article was translated to English using an AI tool.

FashionUnited uses AI language tools to speed up translating (news) articles and proofread the translations to improve the end result. This saves our human journalists time they can spend doing research and writing original articles. Articles translated with the help of AI are checked and edited by a human desk editor prior to going online. If you have questions or comments about this process email us at info@fashionunited.com