Woola, a company supplying protective packaging for e-commerce, has raised €2.5m ($2.72m) to accelerate its move towards sustainable packaging.

The funding was led by investment company Metaplanet while existing investors Future Ventures and Lemonade Stand alongside angel investors also joined the round.

The company will leverage proceeds from the funding to strengthen its sales and marketing team.

Woola CEO and co-founder Anna-Liisa Palatu said: “We founded Woola to help stop the use of fossil fuels. We are replacing protective plastic packaging with sustainable alternatives made of wool that work just as well, but look much better.”

Founded in 2020, Woola focuses on replacing plastic recycling with packaging produced from unused sheep wool.

Every year, only a small fraction of the 141 million tonnes of plastic packaging being produced are being recycled, the company said.

The company also noted that up to 90% of sheep's wool is burned or buried in countries across Europe.

Woola has been replacing bubble wrap in the e-commerce sector and is now expanding its focus to the luxury goods market.

The company’s packaging is being used by major retailers such as LVMH Group.

Metaplanet managing partner Rauno Miljand said: “Woola is rescuing a natural resource - sheep wool - from ending up in landfills and using it to help retailers, from e-commerce to the top companies in the world of aesthetics, reach their sustainability targets.

"All of this is done via a product innovation cycle and a quick feedback loop with the customers.”