The Business of Fashion
Agenda-setting intelligence, analysis and advice for the global fashion community.
Agenda-setting intelligence, analysis and advice for the global fashion community.
What is your business idea and what problem is it solving?
Our mission is to promote responsible consumption by disrupting existing supply chains and transforming them into what we call ‘prosperity chains’, where products are embedded with full traceability from artisan to consumer. It is an internet-enabled community building tool for companies seeking to link their customers emotionally to the their brand values, a real expression of 21st century product customisation brought to the mass market, and a way to cater to three powerful emerging consumer trends:
What market does it address and how big is this market?
The apparel market worldwide is estimated at $0.5 trillion. As brands are now being held to a much higher standard by customers who demand transparency about provenance, environmental consequences and labour practices, we believe that over the course of the next few years a not insignificant percentage of this market will present an opportunity for The IOU Project.
Who is your competition and how are you different/better?
There is little competition in traceable manufacturing of apparel as it is an emerging field with plenty of opportunities for first movers to set the standard. Our idea is not to be an exclusive brand, but an inclusive brand, so we look around and see only potential collaborators.
Building on the experience and technologies developed for the IOWEYOU brand, we have perfected a manufacturing process that allows for the mass production and tracking of one-of-a-kind pieces, from hand-woven fabric to finished goods, through an innovative methodology and online logistics technology platform (B2B) that involves aggregating small, high-quality production of hand-woven textiles and labeling them with a special coding system. Our multimedia storytelling also allows for a rich consumer experience.
What is the revenue model?
We have 3 clear revenue streams:
In the future, we will explore providing traceable, authentic artisan-made materials to other brands and designers, creating a Wikipedia of artisans and craftsmen worldwide.
Who are the team that will make your idea a reality?
We are a group of experienced entrepreneurs with backgrounds in apparel design, manufacturing and retail (Raasta, OshKosh), technology and management consulting (MIT, McKinsey), media (Warner Brothers) and human resources (Hay Group).
How much funding are you seeking and why?
$3 million. Funds raised in this round will be used for:
Frederic Court, Partner, Advent Venture Partners, London
I felt very compelled by the ambition and motives behind IOU. In a world where storytelling is so important in order to engage with consumers, you definitely have a great story and I am sure your team has worked very hard to get to this stage. The main question I have is whether the IOU "project" can be turned into a (very) profitable "business." Should I use Etsy as the benchmark, or Kiva, Causes, or Charity Water —business or charity? You refer to apparel as being a very large global market, which is correct, but my question is how big is the addressable market for IOU? I am not sure of the economic model, i.e. are you a store with inventory or a marketplace? The marketplace model would be more attractive to me, but the focus on small remote producers, unlikely to be online, would prevent it. An additional challenge with sourcing from small producers is that it will make it harder to scale your business, with limited breadth and depth of offering per producer. The positioning is not easy as you offer one-of-a-kind pieces when people may be able to find very similar items at Urban Outfitters or other chains with an "ethnic" positioning. On the acquisition side, I like the trunk show idea, especially if you can get the hosts to promote them effectively and reduce greatly your cost of acquisition, but I have not seen on social networks a massive viral engagement around the Project yet. Have you thought of crowdsourcing your funding? This might appeal to your customers.
In summary, to justify a $3 million raise, I would expect you to have clarity on your key metrics (I have not seen them in the pitch) and a more focused proposition. The three revenue streams you describe are too different. You should pick one and focus on it.
Kirsten Green, Founder, Forerunner Ventures, New York
I couldn’t help but peek at your website. You had me with the video. I immediately felt emotionally connected to your brand, something I consider to be a hallmark of most, if not all, very successful consumer brands and something that is not easy to evoke.
If your ambition is to build a mainstream brand, I think you will be well served by viewing your competition as fashion apparel brands rather than looking at it from the supply chain side. To that end, I’d like to better understand your design point of view, customer focus and commitment to collection building.
In terms of distribution, it would be helpful to understand how you see the wholesale business interacting with the online and trunk show efforts. I think both channels can be pursued, but it is meaningful to detail out a strategy and remain focused on how one will benefit and impact the other. Along those lines, I think the trunk show model could be interesting, but I, admittedly, was thrown off by the geographic diversity of existing sellers. I would recommend focusing to build some critical mass in a specific market before trying to serve too broad a swath.
Ben Lerer, Founder, Thrillist and Partner, Lerer Ventures, New York
Kavita, your unwavering dedication to launching a brand in the responsible commerce space is evident and inspiring. Judging by what you’ve accomplished to date on the surface — a well-designed and fully functioning e-commerce site, a line of stylish clothing, and a thoughtful video outlining your mission statement — there is clear passion here, but from a business perspective, a number of questions arise upon hearing the terms “hand-woven” and “one-of-a-kind” product. While there is mention of a proprietary technology platform that allows you to scale logistically, there seems to be some inherent contradiction to the phrase: “mass production of one-of-a-kind pieces.” So my main questions centre around scaling, the innovative systems you have in place to do so, and margins. As you point out, the feel-good, charitable apparel model has resonated with a wider audience — we’ve seen this happen with Warby Parker, TOMS Shoes, Feed Projects, and others — but do consumers care about provenance, authenticity, and creating self-sustaining artisan communities in the same way that they care about gifting and donating directly? Given the emotional appeal to the brand, I believe there should be a very strong focus on online community straight out of the starting gate and I wonder if you can leverage partnerships with existing, like-minded online communities like Etsy, Ravelry and Burdastyle to seed IOU with vocal advocates early on. Operationally, there are a lot of moving parts here that require careful consideration, but I respect the brand you’ve built already and applaud your ambition to tackle a large idea.
Rachel Shechtman, Founder, STORY, New York
I love what you are doing! You have a well thought out business and are off to a great start. Everything from the design, quality, infrastructure and interactive web interface is fantastic. I think the multiple revenue streams are imperative for the viability of the business, so that if you are impacted by 3rd party retail sales but have a strong direct business you can allocate resources accordingly. However, I would be interested to know more about the respective percentage each makes up from a revenue standpoint, as well as use of funds to support each and how that impacts ROI per distribution channel. Also, your fabrics have a wonderful and distinctive look, but I am curious about your ability to diversify into other materials and markets to meet the various demands of customer and market trends. For example, if people want knits instead of wovens or solids instead of plaids, do you have access to those resources and the ability to maintain the transparent and economical supply chain that is inherent to the model?
Imran Amed, Founder and Editor, The Business of Fashion, London
This is a compelling idea that immediately brought to mind an interview I did not too long ago with Simone Cipriani of the Ethical Fashion Initiative, who reminded us that the current fashion system often grossly underpays the individuals right at the beginning of the supply chain, namely those people who actually make the garments that we wear. I would be interested to learn more about your pricing strategy and the mark-ups therein and would consider offering transparency to your consumers as to how each of the constituencies along the way are rewarded for their work. This would provide further evidence of the good work you are trying to do and can also showcase the extra value you are providing consumers as a point of differentiation from traditional fashion companies. Also, perhaps there is a way for you to integrate community feedback around garments that have already been purchased, bringing existing customers back to your site to provide social proof. What stories do they have to share about their garments? As you have rightly pointed out, the best advocates for the IOU Project will be happy customers. Encourage them to come back to share their stories — and shop some more!
WHAT DO YOU THINK?
Now, it’s time for the BoF community to offer their thoughts on the IOU Project. What do you think about the business and its potential? And what advice would you give its co-founder, Kavita Parmar?
If you have a promising business idea in the fashion-technology space or are already working on a start-up and looking to raise your profile or attract funding, send us your Elevator Pitch. We are accepting Elevator Pitches on an on-going basis, by email only, and will review the first 500 words you submit. For detailed instructions on how to submit your pitch, click here.
Elevator Pitch is a recurring feature on BoF, co-curated and developed with Rachel Shechtman.