You will be redirected back to your article in seconds
Skip to main content

From Luxury to Logistics, This Is What VCs Funded This Year

It’s a good time to be a startup in search of funding. The first quarter of 2018 raked in the highest level of venture investments this decade, according to Pitchbook, and Q2 brought in nearly as many dollars, too.

Chalk it up to a healthy economy and investor optimism, but 2018 has brought sizable investments in startups across the fashion supply chain, rewarding a number of ideas ranging from sustainability to custom suiting to size inclusivity.

Here are some of this year’s highlights.

Sustainability

After a long stretch in which sustainability was linked more to “greenwashing” than making an actual difference in the word, it’s now beginning to be taken seriously in the fashion milieu. Increasingly, people are demanding sustainably-minded products across the apparel spectrum, and now brands, backed by venture capital, are answering that call.

Allbirds, perhaps the poster child for trendy, eco-conscious brands, raised a fresh, $50-million funding round in a Series C led by Fidelity Investments and T. Rowe Price. Much of the B Corp’s windfall is earmarked for a brick-and-mortar and digital expansion that will bring stores and e-commerce to Asia, in addition to boosting its domestic presence here in the U.S.

Investors, it turns out, are interested in backing sustainable innovations at various points along the supply chain. Case in point: Swedish firm We aRe SpinDye raised the equivalent of $3.46 million to scale its SpinDye process that uses 75 percent less water, slashes chemical usage by 90 percent and features a carbon dioxide emissions footprint 30 percent smaller than traditional dyeing methods.

Related Stories

Circularity—sustainability’s kissing cousin—is catching the attention of deep-pocketed investment firms. For Days, the closed-loop T-shirt subscription startup sends members new tees when they return their worn-out ones, launched in April and raised $2.8 million in a November seed round backed by eight different firms. The company recycles the used tops, blending the resulting fiber with virgin material to make new products. At SXSW earlier this year, founder Kristy Caylor said of launching the startup, “The customer’s connection to the supply chain is virtually non-existent. That doesn’t feel right and it doesn’t feel like the future.”

Through its membership model for men and women, For Days aims to educate consumers about the lifecycle of their clothing and what happens to a garment after it no longer serves its original purpose.

Manufacturing

The/Studio raised $11 million to further strengthen its cloud-based, on-demand manufacturing platform that helps brands produce smaller runs that the volumes the big factories require.

“It’s ridiculous in the modern age that is so hard to source factories. It’s a big pain point,” founder Joseph Heller said.

Fit tech

No one’s yet developed a killer app in fit and sizing technology but plenty of companies are trying their hand at innovations to help shoppers choose the right clothing size when purchasing online. In mid-July, 3DLOOK landed $1 million in seed funding to further develop its body-measuring app that uses just two smartphone photos to calculate the consumer’s dimensions to within 97 percent accuracy. The startup is using the money to build out its engineering team and develop new augmented reality features that would allow users to see their virtual avatars modeling clothing they’re interested in buying.

Fit tech heavyweight True Fit used the $55 million Series C funding it announced early in January to launch True Insights and True 360, a pair of analytics-centric products designed to unlock rich customer data and behavioral insights. While True Fit has branched out beyond its fit predictor tool for e-commerce, other newbies like Israeli sizing tech firm My Size are hoping their ideas for capturing body measurements capture consumer—and enterprise—interest.

In February the Middle Eastern startup raised $6 million in post-IPO equity and made a fall fashion-week push with its newly launched app that guides people through the step of recording their height, chest width and other critical measurements. It just opened the Modelista e-commerce store where people can shop for clothing using the measurements they’ve taken using the app.

Customization

Maybe you’re tired of hearing the term “customization,” but it’s one of those fashion industry trends that shows little sign of slowing, especially as more people realize they can get exactly what they want instead of settling for off-the-rack products that are merely “good enough.”

Investors are paying close attention to this made-for-you movement, as evidenced by minority investment that digital bespoke men’s wear startup Knot Standard received in April from Los Angeles-based growth equity investment firm Provenance. The press statement issued for the funding news seems to indicate that eight-year-old Knot Standard will apply the undisclosed investment sum to a “significant” retail expansion that would grow its current fleet of seven nationwide showrooms.

Fellow custom clothiers InStitchu and Indochino inked their own funding deals this year, too. Dayang Group, China’s biggest suiting manufacturer, gave InStitchu $2.5 million that will help the startup boost its physical and digital presences and build on its lone U.S. shop, located in New York City. Indochino also received a vote of confidence from a non-venture source, Mitsui & Co., that will help the made-to-measure men’s wear startup pivot from e-commerce darling to a true omnichannel player. Neither of the firms disclosed the size of the investment.

British startup The Drop plays both in the custom tailoring and sustainability spaces, promoting the message of environmental responsibility when educating shoppers about how purchasing made-to-measure garments can help clothing avoid the landfill. The London firm that offers customizable suiting delivered anywhere worldwide in three weeks raised 500,000 pounds ($637,000) to reach more global shoppers.

Maybe it’s because fashion, for a long time, overlooked men’s apparel to focus on the larger women’s wear market but new brands are cracking into the men’s market at a fast and furious rate, and the standouts are securing capital to build their businesses.

Bespoke Post offers a subscription “box of awesome” filled with cool products tailored to guys’ interest, ranging from apparel to grooming goodies and more. It raised an undisclosed sum in a July 1 venture round, and will apparently use those funds to partner with brand development studio, the Foundry, to uncover product opportunities and manufacture them responsibly with reputable production partners, TechCrunch first reported. Bespoke Post plans to build new products in the apparel, footwear care and homewares categories.

Grailed, the resale streetwear-focused peer-to-peer community that lets users buy and sell their fashion finds, raised a $15 million Series A round to get more products on the site and elevate the customer experience. The company will reportedly use some of the funding to grow its sister site, Heroine, which caters to female shoppers.

Plus and inclusive brands

According to a Coresight Research report, spending on women’s plus-size clothing reached $21.4 billion in 2016, accounting for just 17.5 percent of women’s fashion overall, though the firm believes full-figured fashion presents a $46.4 billion opportunity. A number of innovators are doing their part to cater to a chronically underserved demographic.

Shortly before Thanksgiving, plus-size subscription fashion startup Dia & Co. raised $40 million in a Series C round—reportedly one of the largest rounds ever raised by female founders. To date the company that believes in empowering women wearing sizes 14-32 has raised $95 million to grow a business that, similar to Stitch Fix, lets customers try on a stylist-picked selection of apparel and accessories at home, keep what they love and return the rest.

Fellow large-size disruptor Universal Standard attracted $7 million in funding early in 2018 that it used to open a 13-month SoHo pop-up store and expand its sizing to a truly inclusive 00-40. It also this year cozied up to J.Crew to help the preppy Americana brand offer plus sizes throughout its range, in addition to collaborating on limited-time capsules.

Luxury

High-end retail has not been without its own investment activity. LVMH shook up the luxury world when its Luxury Ventures division invested in sneaker empire Stadium Goods, which resells covetable footwear through e-commerce and a SoHo flagship store. Details of the tie-up were not disclosed but indicates an increasing blurring of lines between luxury and streetwear.

Across the pond, Threads closed a successful round to build out its chat-based luxury shopping business that leverages popular platforms like WeChat, Facebook Messenger and WhatsApp. Messaging provides a certain intimacy that high-spending customers appreciate, according to founder Sophie Hill.

Threads received $20 million from investors including Highland Capital, which also has invested in brands like Rent the Runway (RTR). It plans to use the funds to expand into men’s fashion and add new women’s categories.

Speaking of RTR, the nine-year-old digital native secured a $20-million investment from Blue Pool Capital, the VC fund run by Alibaba founders Jack Ma and Joe Tsai. In discussing the windfall with Recode, co-founder and CEO Jennifer Hyman described the investment as an opportunity RTR couldn’t pass up, given its “global aspirations.”

Logistics

How goods make their way to and from customers is just as important an area of investment and innovation as is the customer-facing brand and retail experience. As such, investors are recognizing the value of supply chain startups that solve tangible problems within the logistics industry and address consumer pain points.

Fetch Package Inc. is one such startup that enhances the last mile for end customers. It received $3 million in seed funding to expand its business that helps apartment complexes rid mailrooms e-commerce package pile-ups, working directly with consumers to schedule their deliveries from local warehouse depots.

Convey, a cloud-based platform used by retailers like Neiman Marcus and Eddie Bauer to resolve last-mile issues before they impact the end customer, raised $10 million from investors including Techstars Venture Capital.

In a study published last month, 98 percent of 1,500 surveyed individuals told Convey that the e-commerce shipping experience can affect their loyalty to a brand, and 84 percent said they’re likely to ditch a brand after a single delivery gone awry. There should be consequences for missing delivery windows, too, according to the 87 percent who believe brands should “make amends” for such a violation. Then there’s the 52 percent who expect a retailer to either refund or discount the shipping fee when things go off the rails.

Convey claims to reduce delivery times by 22 percent and resolve shipping snafus four times faster than competitors. The company said it plans to use the new funding to boost its headcount in sales and client success, and expand its product portfolio.

Returns optimization startup Optoro raised $75 million to grow a business tackling the challenge of dealing with the $260 billion in unwanted stuff that customers hand back over to retailers each year. “The retail industry has a major problem—returns create tremendous financial, operational, and environmental waste,” Tobin Moore, CEO and co-founder of Optoro, said in a news release. “With this new round of funding, we plan to accelerate the adoption of our solution with the world’s leading retailers and brands, and invest in R&D to take our solution to the next level. This positions us to help more retailers increase their profits, while also minimizing their environmental footprints.”

Chicago-based project44 raised a $45-million Series C round to advance its freight tracking platform that helps shippers and 3PLs plan, track and confirm their freight shipments via API, an upgrade over outdated EDI systems. Its systems connect to 175,000 global carriers and integrates out of the box with 57 transportation management system vendors. In October, project44 and Denmark’s Gatehouse Logistics forged an exclusive agreement to “provide secure and authorized access to the largest visibility network across North America and Europe,” the companies said in a statement.

“Visibility is the number one supply chain initiative,” project44 founder and CEO Jett McCandless said in a statement. “We’ve seen a record number of North American and European companies investing in real-time visibility platforms to be used either stand-alone or with a TMS, CRM, WMS or ERP.

“This partnership accelerates the speed at which manufacturers, retailers, e-commerce providers, distributors, freight forwarders, and 3PLs can successfully realize the benefits of end-to-end visibility by working with a single visibility provider for all shipments regardless of geographic location,” he added.

While this list of VC-funded companies is by no means exhaustive, it offers clues as to the kinds of businesses that investors believe will provide a compelling return on investment and influence the fashion and logistics industries in years to come.