Making Sense of the Fashion Entrepreneurship Ecosystem

MAKING SENSE OF THE FASHION
ENTREPRENEURSHIP ECOSYSTEM
RYAN CLOTT
WORTH WEEKEND
MARCH 2, 2O19

LANDSCAPE
OVERVIEW
CASE
STUDIES1 2
ECOSYSTEM
SUPPORT
ORGANIZATIONS
3 FINANCIAL
INSTRUMENTS4
ENGAGING
WITHIN THE
ECOSYSTEM
5

WHO AM I?
CO-FOUNDER & MANAGING DIRECTOR
PROGRAM MANAGER
RYAN CLOTT
www.linkedin.com/in/ryan-clott/
COMPANIES I’VE WORKED WITH GUEST LECTURER
PUBLIC SPEAKING
STARTUP MENTOR / ADVISOR
ENTREPRENEURSHIP INNOVATION EDUCATION

LANDSCAPE OVERVIEW
Need lots of help with numerous aspects of their business
Don’t always know where to look, or how best to engage
with the ecosystem
Particularly in the fashion industry it’s quite closed, so there
isn’t the transparency or structure that other industries tend
to provide for startups
THE STARTUP PERSPECTIVE
CURATED EDUCATION
TARGETED RESOURCES
MEANINGFUL NETWORK
SEEKING
STARTUPS

LANDSCAPE OVERVIEW
Want to help, but need to know specifically how best to help
Would benefit from collectively having several support
organizations working together, enabling a comprehensive
and collaborative ecosystem
Often times each organization has very specific things it can
provide real value on, and its best to find startups that fit
within this value proposition
THE SUPPORT PERSPECTIVE
PROFESSIONAL & EXCELLENT TEAMS
HIGHLY INNOVATIVE TECHNOLOGIES
SCALABLE BUSINESSES WITH A MARKET DEMAND
SEEKING
SUPPORT ORGANIZATIONS

LANDSCAPE OVERVIEW
BRIDGING THE GAP
STARTUP SUPPORT ORGTRANSPARENCY
INFRASTRUCTURE
COMMUNICATION

CASE STUDIES
www.ivalo.com www.doppelhaus.co.ukwww.materiarica.com
1 FIND YOUR ONE THING YOU NEED FOR MASSIVE PROGRESS
2 IDENTIFY WHAT SUPPORT ORGANIZATION CAN HELP BEST

THE TEAM THE BUSINESS
CASE STUDY

IVALO’S
ONE THING
PRODUCT /
MARKET FIT
CASE STUDY

Experienced and
well-rounded team
led by a serial
entrepreneur
Had capital to work
with, which helped
with their overall
speed and
professionalism
Due to raising a
large round prior,
in some ways they
thought they were
past the stage of
an accelerator
Having a larger
board also made
them less flexible
to make quick
decisions
OBSERVATIONSPROS CONS
CASE STUDY
They were an energetic and robust team, led by
a CEO who was a serial entrepreneur.
In some ways, partly influenced by their
previous funding, they were in a mode where
they were ready to run before they learned how
to walk -- there was some extra effort for them
to get their fundamentals correct and validated.
It was important for them to focus on the right
metrics. Some of the vanity metrics were good,
but fundamental ones like CAC were very high.

FOCUS IN
PROGRAM
VALUE GAINED
WHERE ARE
THEY NOW
Get back to the basics of
understanding their
customer’s needs and what
they can provide to fulfill
those needs
They tested and validated
their customer assumptions
and value proposition
Product / Market Fit
Achieved
Value Proposition Clearly
Identified
Lowered Burn Rate
Significantly
Lowered CAC
Better Conversion Rates
Quickly becoming one of
Europe’s leading ecommerce
platforms for ethical fashion
Stocking over 300 Brands,
from 17 countries; sales in
over 22 countries.
Team growth including a CTO
and Digital Marketing expert;
also top board advisors
Bridge round raised, lower
burn rate, better metrics
CASE STUDY

MATERIA RICA’S
ONE THING
BRAND
COMMUNICATION
CASE STUDY

CASE STUDY
Passionate and
talented team with
notable experience
Proprietary process
that would be hard
to replicate
Great products with
substantial sales
traction already
Slower sales cycles
and potential
growth trajectory
Missing a key role
on team to lead
marketing efforts
Not as appropriate
of a candidate for
angel or VC funding
as an exit is unlikely
This is one of the teams who really took the
most advantage of what was being provided,
each and every week.
Since they came in with such an open mind and
eagerness to learn, they were able to make such
substantial progress during the program
One of the best things about this team is that
they knew what they didn’t know, which made
it easier for them to work with others with
complimentary domain expertise

FOCUS IN
PROGRAM
VALUE GAINED
WHERE ARE
THEY NOW
Geting their story right:
understand what the brand
stands for and then how to
communicate with their
audience
The development of their
communication informed
their sales and operations
processes, which were
optimized in both B2B
and B2C channels
Overhauled Brand Identity
Communication Plan clearly
developed including a
strong element of online
direct-to-consumer sales
and engagement
Mentor network expanded
to use for advice or actual
collaboration to work on
future projects
Since the program, they
have done more than
3x the revenue both via
direct-to-consumer online
sales and wholesale to
retailers
Launched new collections
and collaborations and
leveraging those networks
Opened a shop and studio
in Barcelona
CASE STUDY

CASE STUDY
THE TEAM THE BUSINESS

CASE STUDY
DOPPELHAUS’S
ONE THING
BUSINESS MODEL
VALIDATION

CASE STUDY
Massive potential
in the market for
their type of
product offerings
Technical experience
within textiles
Cofounders had a
great relationship
with one another
Current student or
recent grad with
little business
experience
Getting to market
is especially
capital intensive
Not a high degree
of autonomy to
produce goods
This was one of these cases where you have
innovators who invent something, and then
need to figure out how to commercialize it.
Once they were able to understand what the
market needed, how the industry operates, and
their value proposition, it was much easier for
them to connect the dots and show progress.
While they were less experienced than other
startups, they made up for it with their
commitment and dedication to their company.

FOCUS IN
PROGRAM
VALUE GAINED
WHERE ARE
THEY NOW
They had a technology, but
had not yet built a proper
business around it. They
investigated different sales
and distribution channels
and assessed the market to
understand where the real
demand was for their
product offering.
Value Proposition Clearly
Identified
Sales & Distribition
Strategy
Production Plan
Business Infrastructure
Featured in Vogue Italia
Sales Engagements with
several major brands
around Europe
Manufacturing and supply
chain established
Negotiations with factories
for potential strategic
partnerships
CASE STUDY

Understand what
resource is best
for you to achieve
your One Thing
CASE STUDIES
CONCLUSIONS
EVALUATE
Research options
available for your
startup; examine
if it’s the right fit
INVESTIGATE
Upon interacting
with the resource,
be open and work
hard to revieve the
most value possible
ENGAGE

ECOSYSTEM SUPPORT ORGANIZATIONS

ECOSYSTEM SUPPORT
ORGANIZATIONS
Research Labs
Network and
Influence
Direct or Indirect
Funding
Business Support
Extensive Network
Direct or Indirect
Funding
Pro-Bono or Discounted Services
can be provided such as:
- Legal & Accounting
- Design & Programming
- Marketing & Advertising
Direct or Indirect Funding
FIRST STEPS
SERVICE PROVIDERSUNIVERSITIES GOVERNMENT

ECOSYSTEM SUPPORT
ORGANIZATIONS
INCUBATORS & COWORKING
Join when you are just beginning
and want to gain general business
knowledge and contacts to start
your foundation
This is also good when you are
scaling up, as it can be a good way
to keep costs down instead of having
the major expense of your own office
WHAT THEY PROVIDE WHEN TO PARTICIPATE
HOW THEY ENGAGE
Space and support to develop your
idea or business, particularly in
the early stages of your business
They run on an infinite timeline,
so a startup’s engagement with
them can go on for several months
or years

ECOSYSTEM SUPPORT
ORGANIZATIONS
INCUBATORS & COWORKING
Find an incubator / coworking
that has a specialization in your
particular industry.
This will help your startup get
more valuable knowledge and
more relevant contacts for your
business.
If there are any technical aspects
you need in a space, that should
influence your decision as well.
BEST PRACTICES
EXAMPLES

ECOSYSTEM SUPPORT
ORGANIZATIONS
ACCELERATORS
The best accelerators are extremely
selective. In which case, you would
need to put yourself in a good position
before applying.
Usually, a minimum to
join an accelerator is to have an MVP
and potentially some sales traction.
Also, quite critial is the team. It is very
unlikely to be selected by an accelerator
as a solo founder, and usually they are
looking for a strong, complementary team.
WHAT THEY PROVIDE WHEN TO PARTICIPATE
HOW THEY ENGAGE
Curated information, mentorship,
expansive network, and either
funding directly or connections
to raise capital.
A short, intense program (usually
3 months) with a cohort of other
startups selected. Essentially,
it’s a school for startups.

ECOSYSTEM SUPPORT
ORGANIZATIONS
ACCELERATORS
Similar to that of an incubator,
it is important to join accelerator
programs that have a focus in
your particular sector. By doing
so, it’s more likely that you will
received more valuable information,
a more relevant network, and also
a better chance at succeeding
during the program. Also, it’s good
to form relationships with them
directly, and learn what is important
to them before applying.
BEST PRACTICES
EXAMPLES

ECOSYSTEM SUPPORT
ORGANIZATIONS
OTHERS (DIGITAL)
PLATFORMS DATABASES EDUCATION MEDIA

ECOSYSTEM SUPPORT
ORGANIZATIONS
OTHERS (OFFLINE)
AGENCIES CONFERENCES

ECOSYSTEM SUPPORT
ORGANIZATIONS
CONCLUSIONS
Utilize as many as
possible, but be
mindful of those
that are most
appropriate for
your needs
EVALUATE
Investigate the
capacity of their
resources that can
be provided, so you
can make the best
informed decisions
INVESTIGATE
These resources are
available to help you
and strenghten the
ecosysem at large.
Do your part to make
it easier for these
organizations to
succeed at scale.
ENGAGE

“Free Money”
Can be as easy
as filling out an
application or
writing a
business plan
Can take a long
time to go through
entire process to
actually receiving
the funds
May be strings
attached that
are not in your
best interest
This is a good first
funding instrument
to pursue, but be
mindful of the time
and read through
the fine print.
Take advantage of any
available funds through
grants as this is often the
easiest and lowest risk
way of receiving capital
FINANCIAL
INSTRUMENTS
GRANTS
OVERVIEW ADVICEPROS CONS

Keep your equity
Can be received
quickly
Often times easier
to receive then
angel investment
Interest Rate!
Brings upon debt
to your balance sheet
which makes it more
difficult with future
investors
If the business fails you
could be personally liable
for repaying the loan
FINANCIAL
INSTRUMENTS
LOANS
A traditional funding
source, this tends to be
common instrument for
small, lifestyle businesses
that may not have
fast-growth potential.
This is a rather risky
financial instruments for
startups considering the
high rate of failure. It is not
advised to proceed with
this route unless you have
guaranteed funds in your
accounts receivable

FINANCIAL
INSTRUMENTS
CROWDFUNDING
Great way to
generate sales
and fund inventory
Good platform to
test market and
seek validation
Successful campaigns
are good marketing
and investment tools
Quite a lot of work
to create and launch
a crowdfunding
campaign
Not usually a way
to make massive
profits -- often times
just breakeven
There may be major
delays in fulfilling
your pledges
This is a failry recent route
to raise funds, and is
particularly good if you
have a physical product
to sell. This acts in many
ways as a pre-sales
platform, and can help to
raise funds for production
costs and inventory, while
acting as a means for
market validation. Some
capital may be needed to
create a campaign, but it is
relatively low cost.
Particularly for “hardware”
startups this is a great way
to sell products. It is
recommended to do a lot of
research on best practices
and the differences between
the platforms. It is also
advised to contact to crowd-
funding company before the
launch to get support in
creating and launching the
campaign.
EXAMPLES

EXAMPLES
FINANCIAL
INSTRUMENTS
EQUITY CROWDFUNDING
Makes investment
opportunity open
to a wide range of
potential investors
Advancements have
made this a more
streamlined process
Often times easier
to receive then
angel investment
May not be available
in your region
Still can be difficult
with regulations
Can be complicated
or crowded for your
cap table
Another new alternative
to traditional financial
instruments, this is not
available in all places as
regulations are put into
place. If this is available,
this in essence crowd-
sourcing your investors
through online platforms,
and instead of doing a
pre-sale of products they
receive equity. This is
about power in numbers.
If you have a company that
is truly innovative, and lack
an investor network, this is a
good way to open up the
network for an initial
investment. This channel is
most receommended for
early rounds, such as
pre-seed or seed rounds.

FINANCIAL
INSTRUMENTS
ICO / BLOCKCHAIN
Can be a fast and
somewhat easy
way to raise capital
Lacks regulation
which can lower
barriers to entry
This is the future
Due to the lack of
regulation there are
lots of risks involved,
including many cases
of fraud and hacking.
Most are not sure how
this fits into the overall
investment landscape,
and how it will connect
to traditional ways to
raise capital
Blockchain has brought
upon the Initial Coin
Offering (ICO), which
acts in effect as a way
to do a sort of direct
listing to have stakehold-
ers who invest for a piece
of the company by way of
using digital currency (e.g.
Bitcoin).
Do not do this if you do not
know anything about ICO /
Blockchain. This is very new,
lacks regulation and can be
very risky. If this instrument
is something you are consid-
ering seriously, consult with
an expert in this field.
RESOURCES

FINANCIAL
INSTRUMENTS
ANGEL INVESMENT
“Smart Capital”
Credibility gained
for future investors
Can open up their
investor network
to help close round
or raise a new one
Can give up a rather
considerable amount
of equity for less
capital due to the
early stage of these
investments
Difficult to do,
especially without
any traction
They will be focused
on an exit.
One of the most established
channels for startup funds,
angel investment is
investment from individual
professional investors,
usually former founders who
invest their knowledge and
experience as much as their
capital. They tend to invest
in smaller amounts at earlier
stages, but can be critical to
open up opportunities for
startups in later stages.
This is a well accepted finan-
cial instrument to utilize to
raise funds for your startup.
It is important to find angel
investors you have knowl-
edge and experience in your
specific industry. Also, it is
helpful if you can develop a
good personal relationship
with them as you will likely
be working closely with
them for several years if you
successfully raise capital.
RESOURCES

RESOURCES
FINANCIAL
INSTRUMENTS
JOINT VENTURE /
STRATEGIC PARTNERSHIP
Posibility to provide
complementary
operational
resources to allow
your business to
scale faster
Often times can
mitigate costs
compared to
going solo
Negotiations can be
difficult depending
on which party has
more leverage
Depending on the
partnership
candidate they may
go into the situation
for the wrong
reasons
While this is not as typical
of a route for early stage
startups, it is increasingly
becoming more
commonplace as larger,
more traditional companies
are seeking out startups to
keep them relevant through
the tranformation of all
industries.
Particularly for exceptionally
capital intensive startups,
this can often times be a
good idea to form strategic
partnerships with an organi-
zation that has capabilities
that complement your own.
Common partnerships can
be through manufacturing
partners, or distribution
partners, in order to help
with production or sales.

FINANCIAL
INSTRUMENTS
CORPORATE VENTURING
The scale of the
corporation’s reach
and influence can
catapult your
business
Valuable to have
industry execs
providing input
Can be a very
large amount of
capital investment
Can be a very slow
process to engage
with corporates
Lots of red tape and
risk mitigation
The potential for the
corporation to steal
your IP or copy your
business
As corporations have been
needing to adapt to chang-
es in the industry, many of
them are opening up and
creating innovation hubs or
venture funds. This is a
great way for startups to
leverage their resources,
find B2B partners, and
ultimately set themselves
up for a better chance at a
future acquisition from their
corporate investor.
If you have the inside track
to receive corporate ven-
ture capital, this very much
critical for the big players
as they strive to form their
own startup ecosystems.
Try and find the best fit for
your startup, and be careful
that you are still able to
maintain your key assets
and give your business flex-
ibility as you move forward.

FINANCIAL
INSTRUMENTS
VENTURE CAPITAL
Typically a rather
large amount of
capital investment
Gives a lot of
credibility
Comes with
their network
and knowledge
Sets your business
up for fast growth
Very hard to raise
through this channel
Amongst the most
difficult to negotiate
with on terms
Often times it is a
long cycle to go
through a VC raise
If not prepared, it
can kill your business
The most hyped and often
times the most difficult
source of capital, Venture
Capital is usually the best
bet when seeking institu-
tional investment as a start-
up. Usually there should be
some degree of market vali-
dation & traction, as well hit-
ting on KPI’s and having the
right team in place. Usually,
VC investment starts to be
an option during a proper
Seed or Series A round.
The vast majority of the most
successful startups in the
past decade have been
funded as the grow through
Venture Capital. If you are
able to get to this point, try
and find a VC that specializes
in your industry or your
stage. Also, it doesn’t hurt to
develop these relationships
months or even years before
you actually need to raise
venture capital.

Answer these questions.
Identify which instrument is most appropriate.
Prepare yourself to engage with that instrument.
What is your stage?
What are your operational needs?
What are your goals in the next 3 / 6 / 12 months?
FINANCIAL INSTRUMENTS
FINDING THE RIGHT FIT

ENGAGING WITHIN
THE ECOSYSTEM
YOUR MAP
Understand all the
participants that
drive ecosystems
THE WHEEL

ENGAGING WITHIN
THE ECOSYSTEM
YOUR GPS
VALUE EXCHANGE
Understand the
value exchange,
what they seek
and what they
can provide.

CONCLUSIONS
EVALUATE INVESTIGATE ENGAGE
LANDSCAPE
OVERVIEW
CASE
STUDIES1 2
ECOSYSTEM
SUPPORT
ORGANIZATIONS
3 FINANCIAL
INSTRUMENTS4
ENGAGING
WITHIN THE
ECOSYSTEM
5
FIND THE RIGHT FIT

RYAN CLOTT
www.linkedin.com/in/ryan-clott/
INNOVATION CONSULTANT
ENJOY THE CHEESE!

Making Sense of the Fashion Entrepreneurship Ecosystem

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