For Young Design Businesses, Is Bigger Still Better? – BoF
Wed 5 Jan
Following early aughts private equity deals, designers now are avoiding traditional investment and growth opportunities in favour of new models.
As designers become increasingly hesitant of more traditional options, new paths for funding and operational support have stepped in to fill the void.
Businesses like Shopify and Clearco provide alternative ways for fashion businesses to access quick capital, often offering a flexible payback schedule of monthly payments with a flat fee. They also have few requirements for those interested: many simply rely on automated services that correspond with order numbers and credit scores.
Now, smaller-scale design platforms that offer a range of services to designers like Tomorrow, a showroom turned design platform. To entice designers, these investors offer a mix of money and services and push for profitability instead of sheer scale.
That approach also involves a more equitable relationship between designers and the groups that fund them. Tomorrow’s most recent investment in designer Martine Rose, for instance, also involved a share swap that gave the label an undisclosed stake in the Tomorrow business.
“It really felt interesting and good and decent to have a new view of how a platform, and the creators who are supporting the platform, are sharing the values and the upsides,” Stefano Martinetto, co-founder and chief executive, told BoF.
Designers’ shifting approach to raising capital also signals a new path for business in fashion.
“I don’t think anyone needs another billion-pound business,” said Martinetto. “They may want to be the next Virgil, but most of them want to have a sustainable, mid-size business with longevity.”