Welcome to Helium Magazine’s 2012 FashionTech Industry Report.
After spending all of last year diligently tracking the $1.4B of venture capital invested into fashiontech startups, we’ve pulled the transactions into a database that can be crunched and analyzed. This report (a series of posts) is primarily intended for entrepreneurs and investors, but it is written with a context that we believe everyone in the fashion industry needs to be aware of.
After all, the first acquisition last year was made solely on the value of the founders’ connections with designers.
Before we begin, I think it is important to provide context for this report both for our existing fashion community and the tech readers that are just discovering us. As much as fashion and tech are coming together, this is also an evolution in which the Bay Area fashion industry enters the global fashion market.
The Fashion Show Bubble
In 2008, the Bay Area fashion industry essentially collapsed. The long-running and successful fashion week shut down and the community’s most successful designers were either shutting their doors, moving to other cities or simply pulling back.
Fashion is a very hierarchical system where the elite “bourgeois” are quite often in control, but a new generation of fashion designers and event producers found a blank slate in 2009 and looked to build a new industry with themselves at the top. I have often suspected that this community was composed of newly unemployed individuals looking to take advantage of their newly found time by starting their own fashion “business,” designer label or event production company.
Helium Magazine, however, was completely oblivious to all of this when a group of 40 individuals came together in the summer of 2009 to start the publication. Our mission was to “Lift fashion from the shadows of Silicon Valley,” but we were primarily looking to increase the “relevance” of printed publications by incorporating them into events. It was about innovating magazine publishing just as much as it was about jumpstarting a local fashion industry.
We published our first Zine at the Atomic Fashion Show in September with a sold-out audience of 400 patrons.
2010 proved to be the Hay Day for fashion shows in the Bay Area. Helium Magazine launched our first issue at Charity Fashion Show, the largest fashion show on the West Coast, and went on to distribute it to nearly 10k patrons at luxury fashion events from the Generation of Change fashion show with the Goodwill of Silicon Valley to San Francisco Chic Fashion Week.
Our 2010 Edition of the Element Issue has our coverage of every major fashion show of the year.
In 2011, the Bay Area fashion industry matured and we finally saw the Silicon Valley fashion industry take off. Veteran designer Ronnie Bogle of Nigel Who? returned after a 5-year hiatus, Angelina Haole opened the San Francisco Shirt Company on Santana Row (the first and only fashion designer in the luxury shopping complex) and Santana Row produced an EPIC fashion show for Fashion’s Night Out with a 300-foot runway.
Meanwhile Charity Fashion Show moved to San Francisco for a more prestigious event at Fort Mason with international designers and the San Francisco Bay Area Fashion Network produced The Collection which proved to be the most polished and professional fashion show San Francisco had seen since the original San Francisco Fashion Week at its climax.
Our 2011 Edition of the Collection Issue has our coverage of every major fashion show of the year.
The Bubble Bursts
But despite what looked like overwhelming success and clear progress, I heard feedback from fashion designers that told me the industry would be moving in another direction. In December of 2011, citing major disparities, I essentially predicted that the fashion show bubble would burst.
And indeed it did. “The story of Charity Fashion Show” came to a close as all of the founders moved on to bigger opportunities. SFBAfn transformed The Collection into the San Francisco International Fashion Film Festival with an informal fashion display, and San Francisco Fashion Week latched on to the San Francisco Design Week.
There was no major display of local fashion designers and there was also no 2012 issue of Helium Magazine.
I think that fashion shows proved to be a great launching platform for new designers but a horrible marketing platform for generating business. The elusive “buyer” was never going to show up and place an order for $50k of product for their boutique. Furthermore, fashion shows fostered extravagant designs that looked good on the runway but would never be wearable.
It wasn’t good business and so fashion designers decided to get smart.
FashionTech Capital of the World?
In 2012 the Bay Area fashion industry went crazy for technology. In January, The Keiretsu Forum (the largest band of angel investors in the world) with Nexuri Capital launched the Ahead of the Fashion Accelerator (now called FT Accelerator) looking to find and fund fashiontech startups and position San Francisco as the FashionTech Capital Of The World.
The events were a knockout. Managing Partner Sonja Markova expected the first event would have “maybe 30 people.” After moving to a larger venue, over 300 investors, entrepreneurs and fashionistas would end up attending. In March they again expanded to a larger ballroom where Daniel Sudar, Boditecture and Alphyn Industries would showcase before 400 industry professionals and investors. In May, the event showcased Vasily Vein and even Project Runway finalist Christopher Collins.
What I found most incredible about the events, and the greatest signal of success, was that the hype and attendance was with people who actually mattered. Other than Generation of Change (a charity event), this was the first time I had seen a fashion show filled with wealthy CEOs and politicians. In that regard they were the most successful fashion events San Francisco had ever produced.
Out of 250 applications, 6 companies were selected to be in the accelerator and have been featured in CNN Money, FastCompany, The Huffington Post and WWD.
Walking Blind In Uncharted Territory
Although some people have asked, “When will Fashion Tech just be fashion?” I believe that the FashionTech industry is one entirely of its own and can change fundamental aspects of human culture. I will be publishing a series of White Papers on that later this year, but what is obvious now is that we are walking blind in uncharted territory.
While the fashion industry is evolving in general, the technology industry has never sat still. The two cultures are clashing in a way that makes a very unstable and rocky industry for startups to try and do business in, and that is precisely what leads us to where we are now with this report.
The first solution to this extreme uncertainty is to foster a community that shares ideas between established fashiontech company leaders and startup entrepreneurs. To that, I tip my hat to SF FashTech who has built an incredible monthly forum hosted by industry giants. From Polyvore and ModCloth to Betabrand and Google, SF FashTech has brought together some truly incredible guest speakers and even just finished hosting San Francisco’s first fashtech hackathon with POPSUGAR and Westfield Labs.
The second solution is to analyze the behavior of success and failures of the industry. If there is going to be innovation, there must be venture capital. If there is going to be venture capital, there must be exits. And if there are going to be exits, there has to be companies successful enough to afford the acquisitions.
And that is the purpose of this report. We will look to find answers to questions such as:
- How much money was invested in seed-stage and venture round companies last year?
- In what cities are fashiontech companies most successful in raising money?
- What types of fashiontech companies are raising the most capital?
- What companies have raised the most venture capital?
- What are the outliers; successful companies that no one is talking about?
- What companies were acquired and what companies should acquire each other?
Stay tuned & stay fierce,
Helium Magazine | Publisher