If you had told me five years ago that my wardrobe staple would be my dad’s 40-year-old jumper or that I’d dare to wear the same dress at more than three events in a row, I’d have gasped in horror. None of us had heard of Tik Tok then, and now sustainable fashion influencers are among the most sought after and, well, influential of their kind. Fashion trends are changeable, but the current ‘trend’ is the campaign for this to stop. Vogue are urging their readers to ‘buy less and buy better’. Their biggest Autumn/Winter 2022 fashion trend has been introduced as ‘beautifully made clothes’ which encourage gender fluidity and body positivity. And retail consumers are voting with their wallets (and search engines!), searching for timeless investment pieces, second hand and resale, over fast fashion. This long overdue shift for the fashion industry signals a monumentally positive change, but what affect has it had on businesses looking to attract investment?
Despite economic conditions, there is plenty of cash out there looking for investment opportunities. Equity investment in small UK businesses almost doubled in 2021, hitting a record £18.1bn.
Fashion resale is still seen as a risky venture, with profits remaining ‘elusive’ for now. Despite this, brands such as Coach and Oscar de la Renta have launched their own fashion resale ventures showing that big industry hitters are willing to make the investment. The female founded luxury resale marketplace Vestiaire Collective raised €178 million in funding during 2021. Led by SoftBank Group Corp, the fundraising round signifies a change in the priorities of investors. In a recent interview with Bloomberg, Vestiaire Collective declined to disclose their profitability but did state that they sought to build a ‘more sustainable fashion industry’. It is no secret that an investor looks to make a return, but investments such as this demonstrate that investors are putting their money into ventures with sustainability at their heart.
Many financial institutions are pushing all businesses that they are invested in to improve their ESG compliance, with real financial benefits for positive change.
In our January 2022 report, we predicted a more consumer-led, tech-engaged, and sustainable industry. Fashion technology aims to improve the way we produce and consume fashion. In 2021, record sums were invested into fash-tech and retail-tech startups. But they are still facing resistance from some in the industry. Take the greener, more ethical, lab grown gemstone. Although its properties are identical to stones found underground, the National Diamond Council and many luxury brands continue to argue that lab-grown diamonds are cheap substitutes with no “real value”. LVMH have indicated that they disagree, having recently invested in the Israeli lab-grown diamond startup Lusix, via LVMH Luxury Ventures as part of the recent $90 million funding round. Lusix intends to use the investment to open another factory fuelled by solar power.
Investors continue to show favour towards businesses providing substantial social benefits:
- The British Fashion Council recently partnered with venture capital firm Venrex to provide advisory services for a new investment fund, Venrex BFC Fashion I. All revenue raised by the BFC will be reinvested back into talent schemes and grants.
- Last year, Luxury fashion distributor MadaLuxe invested $2 Million in CodeBoxx, the developer ecosystem helping the retail industry to address the shortage of skilled tech talent by making developer training accessible to diverse populations.
It has always been difficult for fashion brands to differentiate themselves in a saturated market and the competition is only increasing. With continuing pressure on “smart money”, there is “less forgiveness for brands that are not agile or not relevant to today’s consumers’ interests and expectations…” according to the Business of Fashion.
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