Why eBay Backed Refiberd’s AI Sorting Over New Recycling Plants

Refiberd, a US textile sorting startup, was named eBay’s Circular Fashion Innovator of the Year in 2025, winning a $300,000 investment from eBay Ventures. The company uses hyperspectral imaging and machine learning to identify fiber composition in textile waste, enabling accurate sorting of mixed fabrics—the operational bottleneck that has kept global textile recycling below 1 percent despite a mature collection infrastructure.

The funding pattern reflects a strategic shift in how the fashion industry approaches circular infrastructure. eBay selected Refiberd from 11 competing businesses across the U.K., U.S., Germany, and Australia. Instead of investing in new recycling plants, capital now flows to sorting technology designed to integrate into existing waste facilities. The model prioritizes plug-and-play solutions that work within current operations rather than requiring wholesale facility redesign or construction.

How hyperspectral imaging reads fiber composition

Refiberd’s core technology pairs a hyperspectral camera with proprietary machine learning algorithms to analyze textile composition at the point of processing. A hyperspectral camera captures each garment’s spectral fingerprint—the wavelengths of light it absorbs and reflects. The algorithm then decodes that fingerprint to determine fiber type and contamination level.

The accuracy is decisive. Refiberd achieves detection accuracy within 1 to 2 percent, compared to roughly 10 percent for existing sorting methods. According to CEO Sarika Bajaj, “We are much closer to 1-2%, which enables the industry. Most others are around 10%.” Bajaj attributed the advantage to “the use of our AI system. We have developed a harder type of algorithm that makes more accurate detection.” The company partnered with a camera manufacturer for customized hyperspectral hardware while developing the AI and software in-house.

The precision matters because most discarded clothing contains fiber blends, not single materials, and textile recycling machinery works most efficiently on pure fiber streams. A contaminated feedstock renders the output unusable. Hyperspectral imaging identifies fiber composition and contamination across mixed textile waste, a task manual sorting struggles to perform consistently.

The recycling gap
Fewer than 1 percent of the world’s 186 billion pounds of annual textile waste enters recycling channels today. In Debrand’s FY2025 report on the textiles it diverted from landfills, fiber reclamation accounted for 56.13 percent while advanced recycling represented only 1.06 percent, indicating that traditional recovery vastly outpaces newer technologies.

Why brands fund plug-and-play systems, not new facilities

The $300,000 eBay investment reflects capital flowing toward a specific model: sorting technology that fits into existing waste-handling infrastructure rather than new, purpose-built recycling plants. The shift is driven by economics. Building new recycling capacity requires substantial capital investment, and the industry lacks sufficient near-term demand to justify that spending.

Recycled fiber currently costs more than virgin material, removing the economic case for recycling even when environmental arguments are compelling. Plug-and-play sorting technology sidesteps these constraints by working within waste-collection and sorting facilities that already exist and have operated for over a century.

Refiberd designed its system to integrate directly into existing operations. A facility that currently relies on manual sorting can incorporate Refiberd’s cameras and algorithms to process the same material with greater accuracy. The investment positioned Refiberd alongside competitors like SOJO, which offers textile repair services; MOOT, which develops upcycling solutions; and Shopfront, which automates resale. The distinction is that Refiberd targets the infrastructure layer rather than consumer-facing channels.

The sorting barrier that blocks scaling

Accurate sorting is the gateway to scaling textile recycling. The bottleneck is processing, not just collection. Fiber quality determines which recycling technologies can accept a material, and mixed or contaminated streams get diverted to landfill, incineration, or export as secondhand clothing. Today fewer than 1 percent of the world’s 186 billion pounds of annual textile waste enters recycling channels.

According to Debrand’s FY2025 Transparency Report, fiber reclamation accounted for 56.13 percent of the textiles the company diverted from landfills, while advanced recycling accounted for just 1.06 percent. Global fiber production reached approximately 132 million metric tons in 2024, yet advanced textile-to-textile recycling remains in early stages and cannot yet handle global volumes independently. Approximately 85 percent of U.S. textile waste goes directly to landfills and incinerators, while only 15 percent enters diversion streams.

Refiberd’s founders have said the technology has the potential to divert up to 70 percent of textile waste toward high-value recycling operations.

Why the economics still don’t work for many operators

Sorting technology alone cannot overcome the core economic problem in textile recycling. Recycling technologies require what one industry analysis described as “very narrow, clean, and pure inputs,” yet “the vast majority of real-world post-consumer waste does not qualify under current commercial conditions.” Sorting facilities face a dilemma: they are hesitant to invest in automated equipment because current recycling demand remains largely met by post-industrial waste—factory offcuts that are cleaner, cheaper, and more predictable than post-consumer garments.

Post-industrial waste has “full visibility over its origin, composition, and quality,” resulting in more predictable output. Post-consumer waste, even when sorted accurately, cannot match this consistency. The economics mean recyclers have little incentive to pay premium prices for sorted post-consumer fiber when post-industrial offcuts remain available and cheaper to process.

Regulatory support for the intermediate sorting layer remains limited and unclear, leaving financial risk with private operators rather than distributing it across policy frameworks. Progress requires more than technology; it requires parallel investment in pre-processing infrastructure, regional hub models to reduce costs, and policy or Extended Producer Responsibility (EPR) frameworks to de-risk private investment and incentivize recyclable design at the manufacturing stage.

Recycled fiber currently costs more than virgin material, removing the economic case for recycling even when environmental arguments are compelling.

Why capital flows to sorting technology, not plants

The funding pattern around Refiberd reflects broader reorientation in textile recycling investment. eBay’s Circular Fashion Fund, which awarded Refiberd $300,000, has supported 27 businesses since its 2022 launch and will have distributed $1.2 million by the end of 2025. The program partners with industry councils including the British Fashion Council, CFDA, Fashion Council Germany, and Australia Fashion Council to provide mentorship and industry access.

Refiberd has also secured backing from the H&M Foundation, Fashion for Good, and Google for Startups, indicating industry-wide recognition of the technology’s potential. A new recycling plant is a long-term capital commitment with uncertain residual value. Sorting technology—particularly plug-and-play solutions that do not require facility redesign—can be deployed, tested, and upgraded on shorter timescales. If a sorting system proves itself in one location, scaling to others is capital-light replication rather than construction.

What remains unsolved: demand and policy

Sorting technology advances one link in the chain, but the bottleneck has shifted upstream and downstream. On the upstream side, facilities lack incentive to invest in better sorting when cheaper post-industrial waste still meets market demand. On the downstream side, recycled fiber must compete economically with virgin material.

Fashion for Good’s Feedstock Activation Europe project brings together major brands and industry players to improve sorting and pre-treatment of post-consumer waste, aiming to strengthen the business case for the wider value chain. Refiberd’s funding from eBay involves no stated purchase guarantees. The startup must convince individual recycling facilities and textile processors to deploy its system. The broader investment pattern, however, suggests capital is betting conditionally: if sorting barriers fall and demand for recycled fiber grows at viable prices, the infrastructure to meet that demand will follow. The industry’s own assessment is clear: existing operators are, in the words of one consultant, “shouting ‘we are here'” while brands and policymakers search for solutions elsewhere.

Photo: Lauri Veerde · CC BY-SA 4.0 · via Wikimedia Commons