Is The Best Time For Capital Investment In Clothing Brands Now

The fashion track, which has never been favored by capital, has ushered in a small peak of investment since 2021.

According to it orange data, since this year, the number of domestic "clothing" track investment has reached 45, which has not increased significantly compared with previous years, but the total investment amount has reached the historical value of 10.17 billion yuan.

According to the data of enniu, the number of financing events of clothing brands (adult men's wear, women's wear, underwear, sportswear, etc.) increased to 24 from 13 in 2020.

In addition to cross-border fast fashion, underwear and other relatively popular segmentation areas, investors also began to pay attention to some fashion brands facing the domestic mass market.

In September, bosie, which focuses on the "gender free" style, completed a new round of financing - six rounds have been completed so far; At the same time, street clothing brand best also completed the first round of financing of 200 million yuan.

In the team of investors, there are more and more well-known institutions, such as Sequoia China, Tencent leading investment, Zhenge fund, Challenger capital, etc. are laying out the clothing track. Station B, bubble mart, MIHA you and other "new capital players" also aim at the second dimension clothing, Hanfu and other fields.

Wang Jing (pseudonym), an investor in the shoe and clothing industry, told all-weather technology: "at least three fund companies have told me to start studying shoes and clothing recently." Shi Songyuan, vice president of Taihe capital, who is also optimistic about the clothing track, also believes that this year can be regarded as a small financing peak of the clothing track.

However, clothing has always been a low degree of capitalization, still not a hot investment area. Inventory problems exist all the time; The long industrial chain also makes it difficult for each link to cooperate efficiently; However, digitalization and informatization, which can solve these problems, are only practiced in some brands and have not yet reshaped the ecology of the whole industry.

"For a long time, the instability of clothing brands has always been the main reason why investors have been deterred. The life cycle of a single clothing brand has always been difficult to grasp," one investor told all-weather technology.

Both industry and capital are waiting for the emergence of a "new species" of fashion.

1. Going out to sea, second dimension and fast fashion

At present, investment institutions have not yet formed a broad consensus on the clothing track.

"Institutions that have focused on the track for a long time and are more sensitive to new demand are more willing to do so; later institutions are more willing to see if there is a real difference between new brands in overcoming 'fashion risk'," the investors told all-weather technology.

"Companies with strong brand value building, fan operation and supply chain capabilities are more favored by investors," Shi Songyuan said

In contrast, all kinds of capital show obvious preference for fast fashion export e-commerce.

In 2020, the revenue of fast fashion export e-commerce brand sheen will reach 10 billion US dollars; In the first half of 2021, the number of downloads of sheen app was about 7500w times, ranking first in the global mobile fast fashion list. According to information from the investment community, the latest round of financing valuation of sheen is over 300 billion yuan. Meanwhile, Sheen has begun preparing for an IPO.

On the one hand, it has stepped into the traffic dividend period of the global Internet, seized the opportunity of lower overseas traffic cost, and brought online red grass planting, live broadcast with goods and other games into the overseas market, taking the lead in occupying an advantageous position. On the other hand, with the help of the powerful supply chain management ability, the front-end big data can accurately obtain the demand, and the back-end can quickly support the production.

The outstanding achievements of sheen at present make the garment industry see new possibilities, and the entrepreneurship projects of sheen have been set up one after another. On May 11, 2021, Antarctic e-commerce announced a new cross-border e-commerce project fommos; In July 2020, CTO Zhang Xiaopei, the co-founder of many original car groups, chose the fast fashion overseas brand similar to sheen as the entrepreneurial direction, and has obtained about $30 million Angel round investment; In September, cider, a cross-border e-commerce brand that has just been established for a year and focuses on women's fashion, completed its fourth round of financing, with the latest valuation of $1 billion.

However, Wang Jing believes that this mode of sheen is only suitable for overseas markets where the flow playing method is not mature. He told all-weather technology: "the current traffic game in China is too mature. The traffic is concentrated on several major e-commerce platforms. If sheen is in China, users will only search on Taobao instead of its independent website." this also means that the "channel discourse power" is still in the hands of e-commerce, and brands must pay a high price for traffic.

Therefore, in China, some Chinese clothing brands which can compete differently and focus on circle culture have become the focus of attention.

Take "Twelve light years" as an example. Although the amount of financing in two rounds is not high, the investors behind it are Sequoia China, Tencent and other large fund companies, as well as game company MIHA you. And B station, bubble mart and other young users based enterprises, also have layout in this field.

Whether it is fund institutions or Internet or fashion game enterprises, it is not so much investing in clothing brands that they are actually investing in "circles", focusing on the young consumer groups after Han clothing and secondary meta culture.

In contrast, the investment enthusiasm of domestic popular fashion brands is not so high.

Wang Jing disclosed that there are roughly two types of start-up companies in this field. One is a small-scale designer brand with distinct style, aiming at a certain group of people, focusing on high-end and light luxury market. Some of them take the custom-made clothing, and some take the single "pop up" route.

"This mode will be much simpler, with little inventory pressure, and it is easy to achieve a scale of millions or tens of millions," Wang said. However, due to the limitations of positioning and consumer groups, such brands are difficult to be favored by capital.

The other is ambitious to do large-scale brand, which needs to improve the ceiling from product positioning, supply chain and other aspects.

Take beaster and bosie, which obtained financing in September, as examples. Both brands mainly focus on "gender free" style, but in fact, the scope of "gender free" is very wide, which can accommodate a variety of styles, which makes it oriented to the mass consumer groups.

In the supply chain, according to a person familiar with the situation, the supply chain capabilities of both brands are not weak. "The reason why some companies in this industry have high valuation is because of its flexible supply capacity, because it solves your inventory."

These people believe that capital may see the shadow of the next H & M and Zara in them, which is one of the reasons why they can obtain financing at this stage.

2. Fashion clothing is difficult to tell a good story. Although in terms of volume, clothing has always been a trillion level competition, but it can not get the strong support of capital in the development process like other Internet or consumer industries.

"Clothing for most of the early VC is too strange, investors rarely layout. And for the late PE, although buying and selling clothing brands is a common operation, but the valuation multiple has been low, so there is gap between these two types of investors." an investor disclosed.

The most important reasons for investors to flinch are "difficult to de stock" and "short life cycle of SKU".

Take women's clothing, for example. A girl's wardrobe may have 100 pieces of clothing. These 100 pieces of clothing may be selected from 20 brands, 1000 styles, each style has a different size. Even if each style, each size only produces 1000 pieces, the number involved is very large.

Fashion brands need to judge the trend of the future one quarter or even half a year in advance. Once the judgment is wrong, a certain mass-produced style will eventually not be popular in the market, which will lead to a large number of inventory.

Moreover, unlike drinks, snacks and other consumer goods, which have a long life cycle after they come into the market, the life cycle of fashion clothing is extremely short. "If 20 models are not sold well this spring, they will not sell well for the rest of their lives. They can only promote sales or enter other channels." a consumer investor told all-weather technology.

In order to avoid inventory problems and prolong the life cycle of clothing, there are two common practices in the industry.

One is the main "basic model", which makes many subdivisions on the basic model, some are standard colors, some are standard materials, and only a few small changes are made every year. But the uncertainty of this approach is whether the popularity of basic models can continue. In fact, few brands have been popular for several years.

The other is the "fast response" mode adopted by fast fashion brands such as H & M and Zara.

Specifically, the front-end obtains the trend information through big data or other ways, and judges which styles may be popular in the next market. Then design a batch of styles, and small-scale production, on the market to observe the effect. Some styles that are not popular with consumers are quickly eliminated, while popular styles are produced in large quantities and then put on the market.

In the whole model, accurate judgment and rapid response of supply chain are two key elements. If the judgment of tidal current is wrong, the inventory is difficult to digest; However, if a product is welcomed by the market, but the supply chain is not good enough, it will miss the opportunity if it can't add orders quickly.

"Fast" runs through the whole model. Wang Jing said: "in China, we can only compare with fast. We play those things at the front end too well, and we don't have much competitive advantage. We can produce what is popular. After this season and tide, we can't sell it."

Zhou long, founder of women's wear brand uooyaa, told all-weather technology: "many fashion clothing brands are not made from the clothing industry, they may just seize the wind outlet of a certain channel in this industry, and each popular style will get up quickly," Zhou said.

But when this gust of wind passes, many brands have no ability to follow the trend. Zhou long saw that every year there are a lot of trendy brands, and every year many brands die.

"It's like reincarnation," he said.

Whether it is the main push "standard money" or "fast reverse" mode, in fact, there is still no fundamental solution to the problem of inventory, which may also be a proposition that the clothing industry has been exploring.

3. No new species has been born yet. Why is the investment and financing of clothing industry a little hotter since 2021 than in previous years?

"In fact, there is no big change in the whole industry," Wang said.

Another investor, a yuan (pseudonym), who has invested in several clothing brands, also expressed a similar view: "I don't think the track has changed much. It has always been a problem of inventory management."

Wang Jing believes that the reason why capital will pay attention to fashion clothing is to some extent a kind of overflow of consumption and investment fever. "In many consumer areas, the valuation rate is already very high, compared with clothing, it is still lower." moreover, some large fund institutions have over raised funds in fund-raising, which also makes the funds slightly inclined to the clothing industry.

"Although Guochao is a trend, it is not enough if only the trend. It still depends on the brand's supply chain, channel management ability and so on," Wang said.

In his opinion, Li Ning's national tide has done a good job. On the one hand, it has DNA that can't be copied. On the other hand, Li Ning has connected the whole chain from "national tide" to "making money." this is the most important thing

From the perspective of industrial structure, Shi Songyuan thinks: "the application of DTC mode in clothing track has changed the traditional industrial chain structure, and the brand side can directly face fans to do in-depth operation. This provides the possibility for the rapid rise of new brands."

In this process, live e-commerce plays an important role, "Now live e-commerce has developed, and the upper body effect of clothing will be more attractive. In fact, the small factories now have a strong ability to respond quickly. Basically, each piece of clothing will first place the first order, and then quickly make the second order. Therefore, inventory is not a big problem for some brands, and it is basically sold out." a yuan revealed.

Among many brands, there will be some brands that do well in dynamic sales, sales channels, * *, fan operation and supply chain management. A Yuan thinks, without clear short board clothing brand also is worth to invest.

In fact, whether it is the channel, or the upstream and downstream industry chain, this industry has not yet appeared a new species, is still a very traditional industry.

Wang Jing believes that the digitalization of the clothing industry chain in the future can solve the efficiency problems of each link, accurately understand the market demand and reduce inventory. "The industry is very large, and there is still a wave of enterprises that need to do it again. Digitalization and fast reverse mode will generate a lot of dividends in the process of remodeling," said Ma.

But when the tuyere will arrive is hard to predict. "The digitization of the whole clothing industry is actually very poor. I don't think the digitization you see now has not really solved the problem," a Yuan said.

For entrepreneurs, fashion track is always an opportunity. If you grasp the outlet of a channel or a trend, you may take advantage of the wind.

Just capital, still waiting for a brand with sex.