When the designers are interviewed on how they got their brands right off the ground, the most common thing you get to hear is that it costs a lot of money and even more than what they have initially anticipated. The amount is so much more that they might not have even entered this real if knew beforehand. And that amount is not just for the launch, but also for keeping the brand up and floating in this highly competitive market.
Even though getting big order from major retailer might sound as a positive tone for fledgling brand, it further means that the brand has less time to produce the same inventory and hire some necessary employees without any upfront money. Some of the direct consumer brands will have own financial challenges and have to come across plans for funding everything, right from inventory, e-commerce to marketing and distribution, to name a few. Some brands have even lost money despite working hard. So, talking with some of the pros in this industry might help the aspiring fashionistas to come across ways to get funds for starting an entrepreneurship. They need to lend money and from right places.
Asking some monetary support from your friends and family:
It is one of the most common options that everyone knows and nothing to be personal with the ones relating to fashion world. Brands are mostly launch with family and friends round and there have been so many examples like these brands in the market, if you search for it.
- This section means associated with people who are lending you money or investing in your said business so that you have enough money to get the business started.
- This method is already proven to offer you with enough flexibility when compared to the other options about to be discussed later in this article.
- However, it is always mandatory for you to let these lenders know that you might take some time to pay the money back to them.
Working your way for the venture capital:
With the help of venture capital, an investor is able to offer you with money to startup that they always belief to have longer term growth potential. For more of an early stage company, it might be an angel investor as in high net worth individual. Or it can be a venture capitalized firm, which provides seed round of the funding. The current dream of the venture capitalist is mainly to get while the company is small and stay in until it can see exponential growth like investing in FB, when it first started.
- In exchange for the funds, the investor is mainly given equity in
company. For some people out there, this step is deterrent as it means that investor will have some control over companyand well involved in businessdecision.
- In some of the other cases, when the investor has proper experience in growing same businesses, it can prove to be quite beneficial. For the brands willing to reach potential quickly, venture capital can accelerate growth and help them to scale thoroughly. The relationship over here will begin with startups presenting investors with
- It has proven to be one popular way of funding for digitally savvy D2C brands such as Flossier, Everlane and more. They have seemed to be raised the money in
heftyamount within shortspan of time. Even the big name in this industry, Jimmy Choo has used this field of venture capital for growing namesake luxurious footwear brand.
- Some shifts are taking place in this funding option as the investors understand
aboutthe conviction behind these businesses. As for knowing the amount these businesses need for running a successful business, experts have to spend a lot of time in Excel just to lay out various scenes for businesses in terms of those who need to get hired, and the inventory to buy andthe capsules to be marketed.
- Venture capitalists are always looking for some big returns but you have to understand the scale of your business and development at various paces, which might work out great in this regard. They are very patient investors around here.
Heading towards the field of private equity:
A longstanding and common funding method for the fashion brands have to be private equity, where the brand might sell minority stake to some of the private equity firms. These brands are mainly more established than the rest, which prefer going for the venture capital. They further need the finances to grow but not quite big enough for IPO or interested well in full acquisition.
- Some of the examples of present private equity deals will be General Atlantic with 45% of stake in French contemporary label Sezane.
- Then you have the minority stake of Castanea Partner in
- In most of these cases, the investors will actually take on a longer strategic role in trying to fuel the growth of the brand.
Check out on the loans:
Whether you are trying to get financial help from banking institutions or planning to take loan from a known person, when you are going for loan it means you are inviting debt. You have to pay this debt back not alone, but with a rate of interest. It is most likely to be in the inflexible schedule. Debt can often prove to be quite a burden for the smaller brands out there in the market but it will not require you to give any control over your businesses like you usually do under other circumstances.
Make way for the control: It is always mandatory for you to check out all the available options before the matter gets out of hand. You can go through all the versions and then make way for the right choice among the lot around here. To know more about the sessions in details, you can try giving this link, libertylending.com, a press.