With London Fashion Week beginning on Friday the Dreamstake team certainly got their timings right by hosting their first #FashTech event of the year at Google Campus last night.
Paul Dowling is founder and CEO and Marina Atarova co-founder of the Dreamstake start-up platform, which helps early stage companies network and build their businesses through mentoring and events, before ultimately putting them in touch with VC’s and Angels via their “HoxTech Angels” investment club.
Paul believes there is a growing funding gap between early stage companies, who are able to secure investment from Angel investors via tax efficient Enterprise Investment and Seed Enterprise Investment Schemes, and those more established start-ups attracting VC investment above the £1m mark.
In order to plug this gap and successfully raise finance in the £250k-£1m bracket Paul and Marina believe it is essential that start-ups can demonstrate traction, a minimum viable product and a credible business plan. Dreamstake helps founders to measure the progress of their start-ups via an algorithmic scoring system that is applied to all the companies on the platform. The events and workshops they run are designed to give start-ups the tools and opportunities they need to make big strides forwards. Last night was no exception, but it was also about building a community of passionate and committed founders in a sector that attracts the charismatic, the geeky, the flamboyant and the ambitious in equal measure!
There was plenty for a large and excited crowd to do and see before the main event, a panel discussion on all things fash tech, beginning with networking and a chance to check out some live demos from exhibitors including Mink & Stone, the site that allows you to create your own bespoke jewellery online (earn a discount if somebody buys one of your designs!), Stylescape, an app that integrates with Instagram so that you can follow or model street styles from anywhere in the world, and Befittd, an online sizing tool that helps you shop for fashion online with confidence, who have recently teamed up with the likes of Paul Smith and Stella McCartney. A really nice touch by the Dreamstake crew, the live exhibits gave the evening an extra sense of glamour, naturally drawing attention to some awesome products, as well as making networking just a little bit easier!
Marina and Paul had chosen a fantastic panel of top fashion start-up and investment talent: Joel Freeman of “Tinder for fashion” app Grabble, Dean Fankhauser from style platform Nuji, Yasmin Razavi from VC firm Index Ventures and fashionista turned VC Amalia Agathou, from Dawn Capital.
The discussion was chaired by Inma Martinez, who began by reminding us that Fashion is a “2 trillion industry and growing all the time”. It sounds hard to believe but today only 10% of all fashion purchases are made online. Optimists would see that as an opportunity; 90% of the market is still up for grabs! And in the world of fashion, Inma pointed out, “to be successful, you have to be ready to reach and grab for it!”
Dean Fankhauser kicked off the discussion by describing how it felt to win funding from Seedcamp for his social shopping start-up, Nuji, despite having not much more than a good idea at the time; “they funded us pretty much straight away”, he remembered, “but we were lucky, the landscape has shifted since then, that would be very unlikely to happen in today’s environment”. Dean was lucky to have “star in the making” Vincent Thome on his team, a digital strategist who, at the age of 28 was a serial award winner, seemingly destined for great things. But were they bold enough to persuade others they could be successful in a new field with a disruptive product? “We had some traction and enough numbers to build a story on”, Dean explained, “but it was exhausting, our second round of funding more so than our first”. Dean and the team felt the pressure of seemingly endless late nights, questions and changes of direction, but he also found the funding process thrilling; “it just gets addictive”, he noted.
Joel Freeman revealed that he had found Grabble’s first funding round the hardest, “we were very naïve”, he recalls, “there were a lot of things we didn’t understand, basic stuff like how to know if an investor is keen or not. We were endlessly submitting 12 month projections and revising business plans; it began to feel like a pointless exercise. We learnt that the more you know the easier is it to win. We’ve found closing larger rounds far easier than the first one. But the worst thing that can happen is to do a deal with the wrong investor; in that scenario, you are looking at no end of pain. You have to partner with somebody who believes in both you and your business. To do otherwise is to be worse off than not raising anything at all.”
Yasmin stressed that from a VC’s perspective the founder story is one of the most important considerations: “a lot of the questions Index Ventures ask when we look at early stage business, and we do do a lot of early stage, we are heavily engaged with Seedcamp and series A and B rounds, are to do with the founder’s vision. What is the bigger vision, what size do you want to grow to?”
Amalia’s believes that rounds need to be very carefully structured; “think of your rounds like a chessboard, and find the right people to help you. Remember, people predominantly invest in what they understand.” Do numbers matter? “It depends on what stage you are at; early stage, it’s very hard to make accurate projections, but as you grow it should become easier and easier to do.
Amalia also pointed out that some of the most successful start-ups have been founded by ex-investors, such as Mark Lore of Jet.com, who, by knowing the game inside out from the outset, appears to be able to raise funds almost at will! Inma Martinez agreed; “there are some crazy believers out there; after Marc sold Diapers.com to Amazon for $545m he was back in the office soon after with a new company that would compete directly with, you guessed it, Amazon! He has $220m of backing and there is no sign even of a prototype!” If ever there was an industry where success bred success, where people follow leaders…
Which brought us on to the topic of recruitment. How do you find people as ambitious and passionate as a founder, and how important is it that they buy into you as a person, and your vision?
Joel explained that “at Grabble we don’t really do interviews; if we find someone we get along with then we might invite them to come and work for us for a couple of weeks, and take it from there. We firmly believe that 1 person who is a bad fit, or who isn’t pulling their weight can be very bad for team spirit, and therefore bad for business. We’ve also found that ultimately hard work trumps ability. In our business we’re not scared of failure, we know that we are going to fail a lot, that is what growth hacking is all about. So we would rather have people alongside us who can work in that spirit.”
Joel added that he felt London was currently “the best place in the world to do a fash tech company; I’ll probably be proved wrong when a great fash tech company comes out of San Francisco in a year’s time but for me Silicon Valley does not do that kind of company traditionally, so for my money London and New York are better positioned to be successful.”
Not everyone agreed; Dean recalled being particularly impressed with a fash tech start-up he encountered on a trip to Dallas, “not your typical fashion hotspot, but they flew bloggers over to come and see them, and advertised everywhere.” Amalia’s belief was that “you should no more move from London to San Francisco than you should the other way around. Location is not an important factor, don’t worry about where you start your business, just start it!”
So on to the subject of target audience: male or female? Is there polarisation within the industry? “We’re 3 men, it’s pretty terrible”, reflected Dean, but the reality is still that men shop maybe once a year, and women maybe once a week. They enjoy it, whereas certain types of men still don’t. Joel was in agreement; although our platform caters for both sexes, I guess we would ultimately target women over men.”
What has impressed Yasmin the most has been “the companies who have succeeded in reaching a community without spending masses of marketing dollars. Brands with a really strong voice who can build a unique story. We have backed several, such as Wool and the Gang, and Moleskin, who have done this very successfully. Instagram is another great example.”
Joel knows all about making a splash on a shoestring budget. Last year Grabble famously sent 7 models onto the streets of Piccadilly Circus dressed in nothing but body paint, a stunt that saw them featured in the Daily Mail, as well as generating plenty of goodwill amongst Christmas shoppers and within the fashion buying community! A beautifully thought out and executed campaign!
Thanks to all of the panel members who gave of their time so willingly. To find out more about Dreamstake events or to begin your journey by registering your start-up on the site please visit www.Dreamstake.com, or contact Paul Dowling, email@example.com, or Marina Atarova, firstname.lastname@example.org.