A new technology that converts waste cotton into a raw material that can then be used to produce new textiles has won the largest slice of a EUR1m (US$1.1m) grant backed by Swedish fashion giant H&M.

The first Global Change Award from the non-profit H&M Conscious Foundation is aimed at encouraging pioneering ideas on closing the loop in fashion.

Other winning projects include a "polyester digester" that uses microbes to recycle waste polyester textiles; an online marketplace for textile leftovers; an initiative to create new textiles out of by-products from citrus juice production; and a scheme that uses algae to grow textile fibres under water.

The Foundation will now launch the Global Change Award Network, an open-source database for innovations where teams and ideas can grow.

"You can look at it as a matchmaking site, where innovators can present their ideas, get feedback, make contacts and maybe investors can even find the next big thing. A digital greenhouse for innovative ideas," explains Karl-Johan Persson, board member of the H&M Conscious Foundation and CEO of H&M.

Winners of the Global Change Award will also get help to develop their ideas over the next year from H&M Conscious Foundation, Accenture and KTH Royal Institute of Technology in Stockholm, Sweden.

The Finnish team behind 'Making waste-cotton new' will receive the biggest grant of EUR300,000. It is developing a new technology that uses an environmentally-friendly solvent to dissolve the cotton in textile waste – which can then be spun into new cotton-like fibres. This not only reduces landfill waste but also saves natural resources.

In second place, EUR250,000 is being awarded to develop new type of microbe that breaks down waste polyester into its most basic substances, which can then be sold to polyester manufacturers to produce new textiles. Polyester is the world's most common fibre for making textiles and clothes but is difficult to recycle since it is often mixed with other fibres. The new microbe process would work on textiles where polyester and cotton are mixed, as well as dyed polyester.

In joint third place, each securing EUR150,000, are the final three projects.

The online marketplace for textile leftovers is being developed to upcycle "spill" in production, the 10-15% of materials that end up as waste. A software tool will collect and process, in real time, data from manufacturers on their waste inventory – and connect them with designers looking to incorporate these textile leftovers into new clothes. Ultimately, the tool should prevent spill from reaching the point where it becomes waste, as well as helping brands and designers to work in a more environmentally friendly way.

Italian project '100 percent citrus' plans to use by-products from citrus juice production to create a raw material from which a new yarn can be spun. So far, the first industrial prototypes have been developed.

'Growing textile fibre under water' is also researching a new textile raw material derived from marine algae. One of its strengths would be to eliminate the need to transport textiles, as production could be based at coastal regions around the globe.