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This is the fourth feature in our Hard Knocks series, presented by Mantle, which shares insights, war stories, and lessons learned from key players behind the scenes in Canadian tech: the ecosystem builder, the advisor, the investor, and the founder.
Katherine Homuth used to want to start a company.
That was the focus of her ambition when she founded her first venture, ShopLocket, more than a decade ago.
At the time, she was doing Shopify theme development for clients and noticed that it was not yet easy to embed the e-commerce platform into other company’s sites. She developed her business around the concept of a “buy” button.
“Tell me the problem you’re actually trying to solve.”
“It was a very derivative idea,” Homuth said recently. “I thought, other people are doing digital commerce, so maybe if I make a slight change on it, it will make me rich. And I think that’s how so many people start.”
But Homuth now recommends a different starting point, one that helped her launch her current company, SRTX, with the ambition of revolutionizing the global apparel industry.
She believes entrepreneurs and investors have become too focused on chasing prevailing trends, whether it’s digital commerce, Bitcoin or AI. The secret to her success, Homuth believes, is focusing on a problem, rather than a goal.
“I started to become extremely jaded that so many people I was chatting with seemed to be doing what I call ‘technology for technology’s sake,’” she said. “Tell me the problem you’re actually trying to solve.”
Let it rip
In February 2024, Homuth’s company SRTX announced the opening of its new global headquarters in Montréal, a 300,000-square-foot facility that will accommodate the entirety of its manufacturing process.
SRTX is a sustainable apparel and smart manufacturing company best known for Sheertex, an indestructible pantyhose line made from one of the world’s strongest polymers.
If you’re unfamiliar with the problem the company has solved, pick up almost any pair of women’s tights and pull hard. Tears, rips and runs are a reality of a product that has been around since the 1950s, and Homuth didn’t need a background in material science to understand that a product that broke almost immediately was in desperate need of innovation.
“How do we have space travel and self-driving cars but something as simple as a pair of pantyhose doesn’t even last a day?” she said. “It’s bad from a sustainability perspective, but also from the user’s perspective.”
To make a better pair of tights, Homuth started with a search for better materials.
She ordered samples from around the world and when the materials arrived, she would try and rip them. Disappointed in the strength and durability of traditional products, she started researching polymers, and eventually discovered ultra-high-molecular-weight-polyethylene, a product used in bulletproof vests and fishing lines.
She convinced a manufacturer to send her a single spool of fibre, and then shipped it to an overseas hosiery company and asked them to run it through their machine, which broke almost immediately.
But the vendor snipped off a single piece of the material the fibre had produced and sent it to Homuth, along with a request that she leave them alone forever.
“It was white and it didn’t stretch, but it was insanely strong,” Homuth said of the sample. “I would pass it around to all my friends and see if they could tear it. It became a party trick.”
A leg up
The global hosiery market is expected to reach $62.4 billion USD by 2032. Armed with her swatch of seemingly indestructible fabric, Homuth thought raising a round of financing would be easy. She was an exited entrepreneur with a real problem and a giant global market.
“I remember those initial conversations and I would hold up this piece of cloth and I would see a dazed look on people’s faces. They could not see what I saw,” she said. “There are a ton of investors who, when they hear that we do pantyhose, literally will not take a call, will not return an email.”
“We were still stuck in this limbo because no one saw us as a technology company.”
To raise her first $250,000, Homuth relied on her personal reputation and the early backing of individuals like Heather Payne (Juno), Alyssa Furtado (RateHub), Lauren Haw (Zoocasa), Michele Romanow (Dragon’s Den), and Janet Bannister (Staircase Ventures) who were willing to make a bet on her personally.
“Really, I ended up just kind of begging,” she said.
Homuth believes that most investors were thrown off not just by her product focus, but by her approach.
While many companies start with technology, and apply their product to an identified market opportunity, SRTX started from an identified need, and planned to use technology to figure out a product.
“We were still stuck in this limbo because no one saw us as a technology company,” she said.
Homuth’s breakthrough came when her company was accepted into the winter 2018 cohort of Y Combinator, which teaches its founders to “make something people want.”
There, Homuth was encouraged to increase the confidence and focus of her pitch, which used to skirt around the fact that the company made pantyhose in order to try to attract investor attention for its material science properties. Instead, she leaned into the market size and need for her core product. She was also inspired to dream bigger, surrounded by entrepreneurs being coached on how to build $100B+ businesses.
Before entering Y Combinator, Homuth had also found an early ally in Joe Mimran, the entrepreneur behind Club Monaco and Joe Fresh.
Mimran is “a real product guy,” according to Homuth, and she remembers handing him her white swatch of fabric and trying to convince him it could be transformed into a beautiful pair of black tights. The look on his face belied profound skepticism, but he invested anyway.
“He didn’t want to miss out on unbreakable tights if we figured it out,” she recalled. “He was willing to take the bet on the off chance that someone was actually going to solve this problem.”
The devil’s in the details
Today, Sheertex tights are regularly touted as a gamechanger in women’s products, and have helped usher in a new era in wearable and sustainable fashion products.
But Homuth is not finished solving problems.
Her goal is to build a fully circular, sustainable product manufacturing process, applying its material technology to create a line of long-lasting apparel products, made in Canada.
She credits her success to date to the obsessive level of detail she applied to her product research, which allowed her to navigate and address investor concerns.
“Right now the world of entrepreneurship is being told what categories are interesting and a lot of entrepreneurs are pigeonholing themselves into that.”
“I knew about polyethylenes and knit structures and the challenges in getting stretch. I was able to describe everything in an obsessive level of detail and my understanding of all those pieces really helped get those first rounds,” she said.
Homuth applies her same insatiable curiosity to every part of her business and advises entrepreneurs to expand their knowledge base in step with their company’s growth.
Instead of accepting the notion that leaders should simply “hire well,” Homuth believes entrepreneurs need to have a baseline understanding of every element of their business.
“I would be a bad CEO if there were just massive blackspots,” she said. “It would be like having someone leading marketing who doesn’t understand Facebook ads. How will they manage the person who’s deploying them?”
She believes startup founders are often unprepared for the realities of building a profitable business, and should receive more coaching and development related to the realities of governance, financial forecasting and investor communications.
“That was never what I was told or taught in the startup ecosystem,” she said. “And then, when you get to that point, you feel so alone because that’s not what we talked about in those really early stages.”
Funding the goal
According to Homuth, SRTX is now about 12 to 18 months away from where she wanted to get from the beginning, which is to control the entirety of the manufacturing cycle so the company can produce truly sustainable apparel across a range of product lines.
To get here, Homuth has raised round after round of funding to prove “one thing at a time,” which she describes as a long and expensive process.
“If I had gotten $200 million at the start, I could have done everything faster and cheaper,” she said. “There are some investors that finance the whole goal rather than the first bite. I think generally Canadian investors do not do that. And that is a lot harder.”
She names Open AI and Tesla as examples of companies that had really big goals, enabled by “a ton of money,” while SRTX was required to balance its large-scale ambition with the requirement to produce financeable, early-stage proof points.
She hopes that venture capital swings back towards what she describes as its original Silicon Valley ambitions, with a focus on product and financing the pursuit of big goals.
“It used to be about financing risk and real things that were being made, and then suddenly investment became very web focused,” she said. “Physical things have been left out of technology for quite some time and we have to move past this idea that startups and innovation are only related to web based things.”
Instead of chasing what the venture market is funding, starting companies based on prevailing tastes and interests, she also thinks more entrepreneurs should draw confidence and inspiration from the world around them, and pursue challenges where they know they can have a meaningful impact.
“Right now the world of entrepreneurship is being told what categories are interesting and a lot of entrepreneurs are pigeonholing themselves into that,” she said. “Obviously I believe in the future of AI, but it is so ridiculous what is happening right now in the market.”
Hard Knocks is presented by Mantle.
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