CFDA Picks Second Fashion Incubator Group

The designers for the class of 2012-2014 will move into their Fashion Incubator studios at 209 West 38th Street in May, when the second season begins.

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NEW YORK — The Council of Fashion Designers of America has selected its second group of tenants for its CFDA Fashion Incubator program.

This story first appeared in the August 18, 2011 issue of WWD.  Subscribe Today.

The new designers are Antonio Azzuolo; Arielle Shapiro of Ari Dein; Benjamin and Doug Burkman of Burkman Brothers; Christian Cota; Emanuela Duca; Ricky Hendry and Marc Daniels of Isaora; Luis M. Fernandez of Number:Lab; Reece Solomon of Reece Hudson; Maayan Zilberman and Nikki Dekker of The Lake & Stars, and Timo Weiland and Alan Eckstein of Timo Weiland.

The designers for the class of 2012-2014 will move into their Fashion Incubator studios at 209 West 38th Street in May, when the second season begins.

Lisa Smilor, CFDA deputy director, said, “We look forward to providing meaningful educational opportunities with the industry’s leading experts to support their efforts.”

The CFDA said Target Corp. has renewed its support as an underwriter of the program for the 2012-2014 season. New this year is a partnership with New York University’s Stern Consulting Corps, starting on Sept. 23, in which designers will have the opportunity to work with selected NYU Stern M.B.A. students who will help them develop full financial statements, cash flow projections and investor-ready business plans. They will work with the new group of Fashion Incubator tenants prior to the start of their tenancy.

Gary Wassner, president of factoring firm Hilldun Corp., is among the mentors who have been helping Bibhu Mohapatra, who is part of the first group selected for the program.

“I’ve been mentoring Bibhu from the first day. He’s made tremendous progress in the way he merchandises the collection. He’s learned how to analyze the customer base, calculate production costs and markups, as well as how to run a business. Each participant receives three or four mentors,” Wassner said.

According to Mohapatra, “The program has helped me grow my business. The industry mentors are helping me tackle the affairs of a rapidly growing business, whether on production issues, collaborations, licensing or legal matters.”

Wassner said the point of the program is to “build sustainable companies who are going to manufacture a good percentage of product in New York City and can use the infrastructure in the Garment Center to leverage their business.”

The business incubator is not a new model, but the concept is growing in stature as more industries seek to support entrepreneurs in start-ups at a time when they are most likely to fail.

Karen Griffith Gryga, co-founder and chief executive officer of FashInvest, the company that makes marriages between fashion entrepreneurs and prospective investors easier and faster, said, “There are different forms of business incubation. One form just provides real estate space for interaction and brainstorming among entrepreneurs, and the other helps companies with actual conceptualization. It is mentor based and it helps with risk reduction of new concepts.”

While Griffith Gryga noted that the tech incubation model such as through Dreamit Ventures and TechStars helps fashion brands on the tech side of the business, the CFDA model is the “holy grail of incubation. They have it all, from real estate at a discount to mentoring of firms in the targeted area. It’s the mentorship in the long term that can really move these businesses along.”

Many business incubator models have donors as the revenue model. Others get their revenue from the start-ups or take an equity stake.

In the case of the CFDA Fashion Incubation program, donors are fostering the growth of the small businesses. The studios for each program tenant are several hundred square feet, and Newmark Holdings is providing each brand with a two-year lease at below-market rates. The New York City Economic Development Corp. in 2010 provided a $200,000 grant to establish the program.

In Tokyo, Bunka Fashion Incubation, a resource center for emerging designers, was launched in November 2011 when Bunka Gakuen teamed up with the local government of the Shibuya neighborhood to open space to allow small offices and workshops for 22 brands at a reduced rate.

Sometimes fashion titans are the donors. Renzo Rosso, founder of Diesel SpA, in April became an angel investor when he took a 20 percent stake in H-Farm via Red Circle, his private investment company. H-Farm is a hybrid model where it provides seed capital to start-ups, as well as an incubation program providing office space and other services.

Designer Cynthia Rowley offers support and seed money to budding entrepreneurs via her program, Pretty Penny. The program, however, is restricted to Cynthia Rowley employees.

In the tech world, Dogpatch Labs is the incubator arm of Polaris Venture Partners, which invests in seed, early stage and high-growth middle-market companies. Seed money, typically angel investors willing to take a chance on the next big thing, funds a company’s earliest stages of development. The next step in early-stage fund-raising is venture capital funding. The three Dogpatch locations — in Cambridge, Mass., San Francisco and New York — provide desk space and bandwidth for the companies, as well as workshop events. It also sponsors Demo Day, where the participants pitch to potential investors.

Seph Skerritt, founder of ProperCloth.com, which enables customers to design and purchase custom-tailored dress shirts online, is currently in residence at Dogpatch’s New York site. His firm was launched in October 2008, and is funded by family and friends.

At the close of 2010, global sales were under $300,000, and an average of 40 percent of shoppers buy more than once. Average prices range from $79 to $250, depending on options, said Skerritt.

He’s eyeing a round of fund-raising later in the year and said the community setup at Dogpatch has helped.

“If I wanted to do a refer-a-friend program, I can ask around here for advice. The odds are someone has already done it, and will provide information on what to do and what not to do. We also have so many start-ups here that investors are always stopping by and we get to meet with them and talk about our ideas and get their feedback,” Skerritt said.

Polaris in the past has taken stakes in some of the companies that have been in residence. For example, StellaService, which uses consumer satisfaction data to rank Internet-centric retailers on their service, is an alumnus of Dogpatch.

Jordy Leiser, co-founder and ceo of StellaService, said his firm “definitely benefited from increased exposure to angel investors and VCs during our six-month stay. I had the opportunity to present StellaService to a wide audience of investors and others in the N.Y.C. startup community as part of the program’s Demo Day, and it undoubtedly helped us in our fund-raising process.”

StellaService earlier this year raised $2 million in early-stage funding.

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