Venture Capital And Luxury Fashion | Sàwai
The personal luxury goods sector had already been targeted by Venture Capital funds even before the pandemic. Although fund managers have varied criteria for selecting companies, luxury's ability to bounce back after the pandemic makes this gamble even more tempting. L Catterton Europe, a leading European investment firm, prefers to invest in more established luxury brands, such as the Italian luxury brand Etro. In contrast, others choose to invest in new brands that meet the sustainability requirement or fit modern consumer needs.
Sea Star Beachwear, a company that sells espadrille shoes, raised $1.25 million in its first investment round in 2020. As reported by Footwear News, the firm was formed by former Hermès PR officer Libby Fitzgerald, who redesigned the iconic summer shoe with quick-drying, non-skid, non-marking neoprene deck bottoms.
Even though Allbirds Inc. is already popular among teens and millennials, it didn't take investors long to notice the San Francisco-based shoe firm. This is not the first time Great Oaks Venture Capital has been involved with Allbirds. After one year, it invested in the Series A round of funding.
Allbirds closed a $100 million Series E capital round in 2020, led by Franklin Templeton, with T. Rowe Price, Baillie Gifford, TDM Growth Partners, and Rockefeller Capital Management. And while Allbirds is "probably Silicon Valley's most glamorous unicorn," according to The Wall Street Journal.
Aside from those deals, there have been many others. Germany's SellerX raised 100 million euros from LVMH-backed investment group L. Catterton last week. Carlyle Group acquired a majority share in the sportswear store END in March of last year as well.
Unlike western venture capitalists, Chinese investors have been champions of the luxury sector for a very long time now. Fashion x Technology equity investment fund was created by Sequoia China, according to Luxe.
As one of China's titans, IDG Capital has invested in Farfetch and Moncler and Shein and Baidu and Tencent and Xiaomi, as well as the online rental apparel platform Yi23, among others. Global investors are connected to China's premier enterprises by another top firm, Primavera Capital Group. Beijing-based investment firm Primavera Investments has invested in several companies, including Alibaba, ByteDance, AntGroup and the electric vehicle maker NIO.
Jack Ma’s Yunfeng Capital may be a relative newbie to the Chinese market. While xiaozhu.com and Kaola have been a significant investment for the private equity firm since its founding in 2010, it is still a relatively small player.
China's venture capital firms have grown their portfolios by investing in fashion and luxury enterprises during the last few decades. Because of this, they gained valuable knowledge of the industry, customer shopping behaviour, and future trends. They've also changed global collaborations and brought foreign investors interested in fashion and luxury closer to Chinese venture capital firms.
According to industry data and insights platform Preqin and Vogue Business, the aggregate value of VC investments in China's consumer discretionary sector has hit $11.9 billion in the first half of the year. The second half of 2021 is expected to see an uptick in transaction value and deal activity.
This means that venture capital firms will continue to invest in disruptors who reduce supply chain risks, provide disruptive retail solutions through digital transformation, or create new products and services. Direct to consumer companies and niche brands will be targeted to establish brand loyalty and promote new designs. In addition, venture capitalists will invest more in cosmetics and skincare brands.
Due to their competitive advantages, such as investments in a software solution that employs emerging technologies and marketing efforts that generate community and brand loyalty. Startups in the beauty industry place more emphasis on long-term growth than on instant successes.
"Zhuben" raised $50 million during its Series A fundraising round, while DearBoyFriend raised several million dollars," Business of Fashion reported. A lot more beauty brands will probably be able to receive venture capital funding shortly.
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