FINANCE AND STRUCTURING
BUSINESS EXPANSIONS IN FASHION
While getting a big order from a major retailer might sound like a good thing for a newly started brand, it means the brand has a short time to somehow produce that inventory and hire the necessary employees without any money upfront. Direct to consumer brands have their own financial challenges, having to come up with the funds for everything — inventory, an e-commerce platform, distribution, marketing and much more from the get-go. In the first few years, most brands lose money rather than turn a profit — it's why so many emerging brands shutter despite the initial buzz. Consistency and a solid long term business plan are two highly important parts in order to receive funding and become successful in the fashion industry.
There are, of course, options for those who aren't, all of which have their pros and cons. If you self-fund, assuming you can afford to do that, chances are your business is going to stay quite small, a prospect with which there is nothing inherently wrong. If you take money from another person or entity, you'll end up with some debt and/or giving up some control of your company. We at Polimex have been able to see all these scenarios from the very beginning. We can easily say that we might know what is the number one and two reasons behind a brand´s success: production and the ability to finance it.
POLIMEX FASHION VENTURE CAPITAL
With venture capital, an investor is providing money to a startup that they believe has long-term growth potential. For a more early-stage company, it could be an "angel investor," as in a high net-worth individual, or a venture capital firm that provides a "seed round" of funding. The dream for a venture capitalist is to get in while the company is still rather small, and stay until it receives an exponential growth, like investing in the giant San Fransisco companies when it first started. In exchange for the funds, the investor is usually receiving equity in the company. For some, this is a deterrent as it typically means the investor has some control over the company and is involved in business decisions. This can sometimes be a problem in order to find a consensus. In some cases, such as when the investor has experience in growing similar businesses, this can actually be beneficial. It is important that you choose your investor very wisely. And for brands that want to reach their potential quickly, venture capital can majorly accelerate growth and help them scale. The relationship typically begins with the startup presenting investors with its business plan. Please bear in mind that business plans should consist of all important information an investor needs to know (cash flow, the structure of the company, core product, mission, etc) but don't make the mistake by doing it too complicated or too long. No investor wants to spend their whole working day figuring out how you going to make money. It should be simply put.
So venture capital has become a popular funding method for digitally direct to consumer brands such as Jimmy Choo, Michael Kors, and Acne who seem to raise large amounts of money in short periods of time. They are just a small example of this rapidly growing segment where brands with turnovers as low as under one million dollars can receive VC capitals in the tens of millions if they have a proven concept.
As the leading producer for high-end brands in Scandinavia between 1994 and 2004 (also know as "Det Svenska modeundret" - "The Swedish fashion wonder") we gained a broad and deep inner perspective knowledge about the crucial steps and strategy making decisions indirect investments and further strategic development in fashion brand and its global expansion.
This was the main focus that made a company like Acne Studios to go from a million euro turnover per year to 50 million within ten years. Many brands that had similar collections and business organizations without a strong VC partner went often the opposite route. Many of these brands don´t exist anymore, just as, unfortunately, the Swedish fashion wonder.
We at Polimex believe that finance and fashion go hand in hand in order to achieve high set goals and expected profits. Therefore we might be able to support highly talented designer brands with not only high-quality production facilities but also funding invoices, factoring client debts and setting up direct cash investment as seed capital into newly founded fashion organizations with high potential and wish to grow rapidly in the fashion industry.
Polimex venture capital is only available for current clients producing at Polimex factories.