California Apparel News

Two Bay Area investment groups have teamed up to launch a program to help technology start-ups focusing on the consumer, retail and fashion industries.

“We were seeing more and more fashion-consumer companies, so it was somewhat of an obvious opportunity. We have the resources and the capital and all the arrows in the quiver to help them grow,” said Randy Williams, founder and chief executive officer of Keiretsu Forum, the San Francisco–based private-equity network that launched the program.

Keiretsu and Palo Alto, Calif.–based investment firm Naxuri Capital kicked off the new accelerator program—called “Ahead of the Fashion”—at a Jan. 10 event at San Francisco’s City Club. More than 250 attendees turned out to hear presentations from several start-up companies, including Oh! Shoes, Clikthrough and Jolie Chic.

Each month, a group of selected designers and start-ups will present to a panel of Keiretsu Forum investor members and fashion and technology insiders. After being judged by the panel, the top presenters from each event will be invited to participate in the first “Ahead of the Fashion” class, which begins in June.

The program will help mentor tech start-ups and designers harnessing technology in new ways and aims to help them avoid many of the common pitfalls that new businesses encounter.

Often, entrepreneurs put too much emphasis solely on their creations without considering how to run the business. Others spend too much time developing a business plan at the expense of product development.

“If you put all of your eggs in either of those baskets, it’s a mistake,” said Matt Harvey, communications editor for the Stanford Technology Ventures Program. “You can develop amazing new technology and the market might not be ready for it.”

On the flip side, waiting too long may mean a missed opportunity. “If you spend a year or two working up an amazing business plan, by the time you finish it, your idea might be obsolete because everything has changed or the market has moved on,” he said.

Until recently, Oh! Shoes had been self funded, with more than $2 million coming from founder and Chief Executive Officer Greg Van Gasse and friends of his. The company recently received funding from a number of angel investors, including Keiretsu.

“Fashion is a dynamic space, and this gives early-stage companies a chance to tell their story in front of potential investors,” Gasse said.

The “Ahead of Fashion” program is seeking companies that have some experience but are ready to grow. For example, the companies may have already raised $500,000 to $1 million through friends, family and other investments and now are seeking another $500,000 to $2 million for further growth, Williams said.

“There are a lot of fantastic companies that need these services but aren’t quite ready for prime time, so they’ll go through an arduous screening,” Williams said. “It’s very difficult to make it through the process to get funding, but we want companies to be ready. This program is a win-win because we’ll get the companies ready, but it also gives us the comfort that they’re ready to scale, and then the angel funding comes in.”

The accelerator program is open to all designers and technology companies related to consumer retail or apparel manufacturing, production, marketing, mobile apps, e-commerce and social media.

Design-driven tech

Laura Moreno, founder of Laly Designs and one of the presenters at the launch event, is a designer who wants to build a technology platform to empower other designers.

Laly Designs started as a small self-funded website where Moreno sold her own designs, but she relaunched it last fall to allow designers to come to market more quickly by offering them distribution channels, public relations and marketing services, as well as a social-commerce engine and e-storefront.  

She said she started the site in 2009, but after two years, she realized how fragmented the fashion industry is and how difficult it is to get to market quickly.

“I thought that if I was having so much trouble focusing on not only how to produce my fashions but also market them, others are probably experiencing the same struggle,” she said. “I decided that I would refocus my vision to help other local designers by offering them PR/marketing services and guide them on how to get their products manufactured and distributed.”

Access to resources

Keiretsu and Naxuri Capital hope to turn entrepreneurs into viable businesses by providing capital and resources such as industry expertise, technology, potential customers and introductions to distribution channels that could lead to revenue, Williams said. The program, upon completion, aims to match participants with angel investors through Naxuri.

The Ahead of the Fashion program may eventually spread to other cities—including Paris, Shanghai, Boston or Atlanta—but for now, it is focused on Bay Area businesses, Williams said. With all of the technology available in Silicon Valley and San Francisco, it seemed the perfect time to merge fashion and technology, said Sonja Markova, managing director for Keiretsu Forum.

“There’s a lot of buzz in San Francisco about fashion and technology. It’s a niche market, and there are a lot of business models—anything from Net-A-Porter to Groupon or other companies. There’s a lot of technology available, especially with the trend in social media, and it’s just a matter of bringing in the right ingredients,” she said.

Founded in 2000, Keiretsu states it is the world’s largest private-equity angel investment network. Named for the Japanese word to describe a group of affiliated corporations, Keiretsu is a global community of private-equity investors, venture capitalists and institutional investors. The company has more than 850 members who fund early-stage technology, consumer, real estate and finance companies, as well as charitable ventures.

According to the company, Keiretsu is not a fund. Instead, forum members collaborate on due diligence and make individual investment decisions to provide early-stage capital.

For more information about the Ahead of the Fashion program, visit http://www.afaccelerator.com.