TOP THREE INVESTORS WHO TAKE CHANCES ON STARTUP FASHION BRANDS
Do you have what it takes?
What does it take to launch my own fashion brand? Well, it takes a lot of hard work, talent, and yes… money. The big problem: There aren’t a ton of investors willing to invest their hard-earned money on a new designer.
The fashion industry is notoriously difficult to raise capital for a few reasons:
- Fashion companies are capital intensive to get off the ground, as you traditionally have to invest heavily and blindly into inventory that may or may not liquidate.
- When selling through traditional wholesale accounts you may be vulnerable to chargebacks, requests to buy back unsold inventory and even requirements to rent retail space or sell on consignment only.
- It takes a long time for fashion companies to build brand recognition and break-even. On average five years or more to arrive at break-even. But once brand recognition is established with a customer base, the opportunities for revenue-driving can be astronomical.
For example, it took Michael Kors 30 years to build the multi-billion dollar revenue brand they have today. But what investor wants to wait 30 years for a return? Investors want to make their return as soon as possible. This is why technology is currently a much sexier industry for investment than fashion.
So what’s a young designer to do? Working for a bigger label is always an option. Adam Lippes worked at Polo Ralph Lauren for years before launching his own label. Chris Benz worked at J.Crew. Richard Chai worked at Marc Jacobs and Donna Karan.
Loans from friends and family always help, but we understand that’s not viable for most.
Another way to do it? Get one of the few investors who do spend money on younger fashion brands to notice you. Now, we’re not advocating knocking down these people’s doors. And you’re probably going to have to come up with your own money to establish the company initially. But doing good work and networking should get you closer to your goal.
Here are three private investors that are known for investing in startup fashion brands.
- Evan Zimmermann
Evan Zimmermann is globally recognized as a specialist in formulating and executing turnaround and brand growth strategies. Mr. Zimmermann made his fortune in the luxury brand business. In 2007 he bought Antiquorum, a Swiss auction house, for $30 million in a distress buyout. He spent the next few years growing the company’s sales from $37 million to $90 million and was able to solidify its position as the largest watch auction house in the world. Mr. Zimmermann then sold the company to an institutional investment firm for $154 million. He has since focused his attention on various investments in startup companies.
He got a taste for the fashion industry through his family brand Zimmermann, and has since invested in numerous companies, some of the most successful have included Farfetch, Rent the Runway and Glossier. These investments show that Zimmermann was not afraid to take a risk in fashion industries that were untested and unconventional when they launched.
- Andrew Rosen
Andrew Rosen is a pioneer in the contemporary fashion market, co-founding Theory with Elie Tahari in 1997. Rosen also backs several labels including Rag & Bone and Alice + Olivia. Rosen sold the majority of his Theory shares in 2003 to Japan’s Fast Retailing, but retains an 11 percent share and continued to run the company until 2019. He has a particularly strong relationship with Theory’s owner, Tadashi Yanai, whose company Fast Retailing also owns Uniqlo and J Brand.
Following the sale of Theory, Rosen invested $10 million dollars in emerging designers. Rosen’s portfolio of investments includes Alice + Olivia and Rag & Bone. He sold his stake in Proenza Schouler in 2014 to LVMH. Rosen also has stakes in Kiki de Montparnasse, Aiko and Gryphon. By 2012, they had evolved into businesses with combined sales of over $300 million, prompting Vogue Editor-in-Chief Anna Wintour to say, “We don’t have a Gucci or LVMH in this country, but in his own way, Andrew is creating a kind of American equivalent.”
- Jeffry Aronsson
Mr. Aronsson, founder and CEO of Aronsson Group, has broad and deep strategic, operational, advisory and investment experience in luxury markets worldwide having served as CEO of Oscar de la Renta (1993-2003), Marc Jacobs (2003) and Donna Karan (2004-2006).
In his 30 plus years in the luxury industry, Mr. Aronsson has developed numerous substantive relationships and opportunities with senior design creatives, operators, and strategic players worldwide.
For the past decade, he’s been a consultant in the industry through his firm Aronsson Group Capital, which specializes in helping fashion and apparel companies with the operational and financial ends of their businesses.