Updated: Dec 21, 2018
The application of technology has enabled change within fashion companies and has forced us to re-envision not only the products themselves but also how these products are sold and through what systems.
Whilst Apple Watch and Google Glass are certainly making the headlines, it is the smaller startups that are fuelling the change, particularly as they are the ones who are relying on experimentation to direct their decisions rather than big data.
So how do you help fashion tech startups scale their ideas?
At HVO Search, we decided to bring together investors and startup founders/CEOs for a roundable breakfast discussion.
Maria Hvorostovsky led the conversation which explored how to attract investors, the difficulties of early investment and what the fashion tech industry will look like in the future.
(please refer to the end of the article for a comprehensive list of attendees)
WHAT ARE INVESTORS LOOKING FOR WHEN IT COMES TO FASHION TECHNOLOGY?
Daniel Bobroff, Investment Director at ASOS, spoke passionately about the importance of a good team or one “where the chemistry works”.
He believes startups with more than one founder have greater chances of success, particularly when co-founders bring a complimentary set of skills.
For Daniel, the very nature of startups means that they’re unlikely to succeed under the direction of an autocrat. With extreme flexibility demanded from every team member, creative, independent thinkers with a multidisciplinary approach are the ideal employees – in other words, precisely the sort of people who thrive in a more liberal work environment.
However, as Sergio Dias, Chairman of SecretSales, stated, this isn’t to say that charisma isn’t important, and that, when it comes to startups, strong leaders have no place.
On the contrary, for Sergio, “charisma is fundamental” in a startup, perhaps more than any other type of organisation, as these need to be anchored by an individual who is “sexy”enough to attract talent at a lower salary than they can otherwise expect, of generating interest from investors and the press, and of making sure that everything runs smoothly in the right direction. As Maria puts it, ultimately, “it’s the character of the people who found a company that takes it forward.”
Additionally, for Daniel, startups should aim to do one thing incredibly well. The problem is that highly talented founders may expect lots of freedom, independence and leeway. But although the startup atmosphere may satisfy these desires better than any other, just because people are capable of doing lots of things, in terms of the startup’s success, it’s generally best to avoid “feature creep” and instead master one specific thing. As Daniel says: “Be a one-trick pony. Be the best at [what you do…] – that’s what’s going to get my attention.”
THE PITFALLS OF RAISING CASH TOO EARLY
Nowadays, under the influence of the American model, the initial aim of startups can often be to secure investment. But is seeking out immediate cash always the best way to go?
For one thing, unlike the US, the UK and Europe are extremely risk-averse – meaning that even the very best startups may not receive the levels of investment they could expect elsewhere. For another, as Daniel explains, early investment may actually stymie left-field, creative solutions: if you have a pocket full of cash, you’re more likely to take a generic path rather than considering cheaper and possibly more successful options – “necessity is the mother of invention”.
As well as early investment preventing companies from pursuing more creative solutions to their problems, Daniel also questioned whether an organisation’s success can even be measured in terms of the levels of investment it manages to raise.
In the US, where investors are much more optimistic, bubbles constructed around attractive but ultimately unworkable ideas are not that rare. In the UK, Daniel argued, we do and should continue to avoid these problems by shunning the US investment model and, instead, look to promote leaner models that develop into sturdier businesses. It is up to investors, he feels, to make this argument to the startup community.
Stuart Marks, Partner and Investor at JLAB, agrees, arguing that support from mentors and incubators may be mutually beneficial for startups and the companies that fund them: “[at JLAB] we have a global platform. If you are a rock star technology company, we can be an embracing sector winner rather than an exclusive one; indeed we probably need to be because we can’t invent everything and do everything.”
Another important issue raised was the lack of any real angel community and how much it differes from the approach in the US. Roberta Lucca, co-founder of Wonderluk visited Silicone Valley last September and was impressed by how much investors “do bring a lot of value to startups and believe in their grand visions. Their principles are: users, usage and then monetisation. Not the other way around, as it is usually expected in the UK.”
Nicola added, “what we need is a medium-sized and vibrant Angel community”. The reason being that, what little angel money there is, it is still highly institutionalised, meaning that entrepreneurs are tied to “certain set of structures”. For Nicola, the UK should replicate the US in terms of successful internet billionaires – of which the UK has a fair few – giving back and funding startups.
In the UK, it's more likely that an investor’s money will come with a high price: a loss of control. As Sergio says, “cash doesn’t come without risk”. However, good entrepreneurs that have chosen to seek out investment will look to manage upwards, exerting their strength and vision so as to ensure that their investors don’t inadvertently upset their trajectory.
WHAT DOES THE FUTURE HOLD?
For Stuart the future is bright for the big retail cities – London, Paris, New York, etc. These places, he claims, are all coming up with new models and ever more intelligent technologies.
Indeed Stuart, who has travelled the world looking for great tech startups, claims that these retail dominated cities are making more waves in the world of fashion technology that the tech hotspots including Silicon Valley.
However, Stuart also believes that, although startups have a bright future, the big brands – including John Lewis, Marks and Spencer, Selfridges, etc. – are yet to really flex their muscles. By working in non-traditional ways – for example, in conjunction with, partnering with, and investing in, startups – the market leaders could really take themselves and the industry to the next level. For Stuart “death of the high street” is over-exaggerated.
When considering the future, Nicola, spoke about the role of the omnichannel approach – either its use as a retail tool, or as a branding one. Since online fashion purchases still only make up 10 percent of total fashion sales, traditional brick-and-mortar retailers have much more scope to extend their online operations.
The winners are going to be businesses and brands that understand what technology and multi-channel means “for them”.
Christina Plakopita – Founder, Netrobe
Christina Plakopita is an entrepreneur and the founder of Netrobe, the iPhone app that helps you manage and style your clothes. Inspired by the now famous virtual closet in Clueless, Netrobe is an online wardrobe that allows you to remember and catalogue individual items. Netrobe launched in August 2011, and since then has been ranked as a top 10 iPhone app in the US.
Daniel Bobroff - Investment Director, ASOS
Daniel Bobroff is Investment Director for ASOS, the world’s leading online fashion site. Before joining ASOS Daniel worked as a technology entrepreneur, developing video games and pioneering work in video game advertising. Currently Daniel is looking to support a new generation of “outside of the box” thinkers. In particular, he is seeking the best of disruptive design, beautiful software, talented developers and other fashion tech game-changers.
Dean Fankhauser - Founder, Nuji
Dean Fankhauser is the founder of Nuji, the online shop that allows you to shop for all your favorite brands and stores in one place. Prior to founding his own company, Dean worked as a User Experience Architect at Dare and Yahoo. He was named a TechCity Insider 100 in both 2013 and 2014.
Mostyn Goodwin - Partner, Media Practice, OC&C
Mostyn Goodwin is a Partner at OC&C with a focus on consumer and online media. He has provided commercial advice on numerous UK and international online growth transactions including FarFetch, Emesa, Just Eat, Rightmove and many more. Previously Mostyn worked as a TMT strategy consultant for 15 years, with projects both overseas and in the UK.
Nicola McClafferty - Co-Founder, Covetique
Nicola McClafferty is the CEO and co-founder of Covetique, an online retailer of pre-owned luxury fashion. Covetique launched in November 2011 and secured investment from ASOS in October 2012. Prior to founding Covetique in 2011, Nicola spent six years in venture capital with Balderton Capital, one of Europe’s largest venture funds behind companies such as Betfair, Yoox, Lovefilm and Ravensbeck – a media-focused consulting and investment firm, focusing primarily on ecommerce and digital media investments.
Roberta Lucca - Co-Founder CEO, Wonderluk
Roberta Lucca is co-founder and CEO of WonderLuk, a Fashion 3D printing start-up. A passionate serial entrepreneur, Roberta has co-founded and acted as CMO and Board member of BAFTA-winning video games company Bossa Studios. With hits such as Surgeon Simulator, the London-based studio has sold games to millions of customers across the globe on Steam, Playstation and AppStore. Voted by Management Today as one of the Top 35 Women under 35, Roberta has experienced success in leading innovation and interactive media products at companies such as Vertu and Globo TV. As cofounder and CEO of WonderLuk, Roberta is challenging mass production by merging 3D printing with high fashion, and turning striking customisable accessories into a regular feature in the world of Fashion.
Sepand Oboudiyat – Founder, Sons of London
Sepand Oboudiyat is the founder of Sons of London, an online shoe business. The company's mission is making luxury quality shoes more accessible to the UK's growing number of style conscious men. The company aims to partner with artisan shoemaking factories in Europe to create a range of classic men’s dress & casual shoes, making them more affordable to customers by selling direct. Prior to his current position, Sepand worked at RBS as Director of Markets Technology. His background is in Investment Banking Technology.
Sergio Dias - Chairman, SecretSales
Sergio Dias is Chairman of SecretSales, the members-only shopping club. Sergio previously served as CEO of Brands4friends, Germany’s number one shopping club, and is Ex-President of Millennium, the Vodka and Rum Division of Moet Hennessy LVMH. He has also worked as Global Group Controller at Carrefour S.A., as well as a consultant at Andersen Consulting. SecretSales raised 6.3m in investments in 2012 and a further 4.5m in April, and has been listed on the Sunday Times Tech Track 100.
Stephan von Perger - Wellington Partners
Stephan von Perger is an Associate with the Digital Media and Software team at Wellington Partners. Previously, Stephan worked at management consultancy firm McKinsey in Dubai and London. Whilst working as a consultant, Stephan became interested in the UK start-up scene and he eventually joined fashion e-commerce start-up Stylistpick.com as their head of operations. During this period, Stephan also established and ran business operations at Citymapper.com. Currently Stephan’s primary role is identifying investment opportunities and building relationships with promising entrepreneurs and business talent.
Stuart Marks – Partner & Investor, JLAB
Stuart Marks is a successful technology entrepreneur who has most recently partnered with John Lewis to launch JLAB, a tech hub for start-ups. JLAB was launched in May to coincide with John Lewis’ 150th anniversary, and was running between June and September. Previously Stuart founded and served as Chief Executive Officer for ITIS Holdings PLC, a traffic data and information company, which was bought for £37m in 2009. Stuart’s work with the JLAB incubator involved identifying and developing technological innovations, which prioritise the needs of the customer.
Maria Hvorostovsky – Director and Founder, HVO Search
Maria’s exceptional talent network, coupled with her entrepreneurial spirit, led to the creation of HVO Search in 2012. Based in the heart of London, HVO Search is the provider of bespoke executive search and intelligence services to global clients within digital, retail, consumer and technology industries.