IndiNature uses materials made from sustainable crops to create natural fibre construction insulation for homes and commercial properties.
Its finished products are deemed carbon-negative as they absorb more carbon than the emissions produced to manufacture them.
The funding will help IndiNature fund a new natural fibre factory in the Scottish Borders which is forecast by 2050 to have the same impact on the environment as planting more than five million trees.
Jane Stewart, Chair of the Circular Economy Investment Fund (CEIF), said: “The company is working proof that, even in challenging times, circular economy business models can have benefits for the environment and the wider economy as part of the new Green Recovery whilst also making good business sense with positive financial impact for business individually and collectively.”
The company, which was founded in 2016, aims to scale up the production of natural insulations without plastics and to make them price competitive and available on an industrial scale.