There are some new faces at the designer dance.
While investing in runway-ready names used to be an insider’s game — with the same top-shelf financiers getting first crack at promising brands — changes at the nexus of retail, fashion and money have opened up opportunities for outsiders.
And they’re starting to jump in.
Billy Reid recently sold a minority stake to Memphis-based Kemmons Wilson Cos., which is run by descendants of the Holiday Inn founder. And Proenza Schouler last year brought on distressed-investment specialist Mudrick Capital Management as a backer.
Those are the kinds of deals that not that many years ago would have gone to a handful of investors who are largely on the fashion cocktail party circuit and over the years have cultivated relationships with designers and other players throughout the fashion system.
But there’s something of a once-bitten, twice shy feeling among the establishment fashion investors, who have been burned by past purchases and are not eager to place new bets while the apparel market is still be disrupted the web, Instagram and everything else.
That’s left brands looking for money — and it seems that nearly every independent designer is looking for at least a little funding — to venture further afield.
Investment banker William Susman, who is a managing director at Threadstone and advised Proenza on its deal, said the market is starting to warm back up with a “renaissance” in certain parts of the market.
“The ready-to-wear businesses have stabilized and are poised for future growth,” he said. “They’ve all managed through their traditional department store relationships, some have exited doors or reduced their volumes, but invested in e-comm and broad [direct-to-consumer]. So they’ve come through this challenging, disruptive period. Some new investors are seeing that as an opportunity. Companies, if they have a scaled brand with a global DTC opportunity, absolutely they can get a capital raise done today.”
The getting could be good for new investors right now.
“Because they’re getting in early in the renaissance, they’re getting very attractive value for their investments and they should do well in this next cycle,” Susman said.
But he said the dealmaking was still very “situational.”
“The Proenza investor was comfortable in distressed, but was passionate personally about this brand, and this opportunity was a good partnership,” he said.
So although the market has changed, much is still the same. Investing in fashion, much like working in the industry, requires both heart and a large pocketbook.