It’s a challenge every startup faces: They’ve built a prototype and proven the thing works, but now they need to sell the product and produce enough to overcome the “valley of death” that kills so many companies.
“It’s chicken and egg stuck,” Josh Felser, co-founder and CEO of early-stage venture firm Edgehe told TechCrunch.
The hurdle is particularly high for companies that manufacture physical goods. Felser noticed it was a common occurrence among startups producing new hardware. Felser, who previously founded and invested in software startups, said the problem they faced seemed somewhat unfair.
“Software companies sell at a negative margin all the time at the beginning, you know, Uber, Lyft, you can see a lot of different examples,” he said. “But for materials companies, they’re not allowed to do that. One of the questions I’ve had is, ‘Why is that?’
Felser found that unlike software companies, which can quickly add more capacity from cloud service providers, hardware startups face a market skeptical of their ability to scale production without a guaranteed customer.
Felser decided to give them one.
He doesn’t run a big-budget smart materials company, but he knows a few. And as a climate tech investor, he knows more than a few startups that could benefit from a well-known customer.
Techcrunch event
Boston, MA
|
June 23, 2026
Felser has been quietly working on a new project, called Material Scale, that brings the two sides together using a hybrid debt-equity investment vehicle to boost materials startups, according to TechCrunch. Material Scale will initially focus on climate technology startups in the apparel industry.
Material Scale bets on startups with commercially ready products that are ready to scale if a customer can buy in bulk. Buyers will commit enough funds to cover the cost of the hardware at purchase price. Material Scale will finance the difference through a combination of loans and guarantees at startup.
“It’s really not very solvent,” Felser said.
Ralph Lauren joins the platform as a buyer for the initial release of Material Scale. Investor Structure Climate joins Climactic as a general partner.
Money from buy orders flows from the buyer through the Hardware Scale at startup. “We’re actually buying it and then selling it at the same time,” Felser said.
The agreements between Material Scale and the buyer and between Material Scale and the startup will be signed essentially simultaneously.
“Once they sign the deals, that will be interesting because the value of the company has changed significantly because they now have a buyer and they have the funding to achieve scale,” he said.
Material Scale has not made any deals yet. Felser said he has major apparel manufacturers interested in participating and a long list of startups that could use the funding. “All startups want that,” he said. “We have a long list of companies that are candidates that we are talking to.”
The first investments will come from a special purpose vehicle totaling approximately $11 million. Felser hopes to eventually branch out into other, similar markets like alternative fuels, eventually growing the Materials Scale concept into the nine figures.
He hopes other investors will steal his idea.
“We need more new tools like this to attack climate change,” he said. “We want to be nimble and be able to take advantage of opportunities when we see them and not just do the same old thing.”
