Fashion Briefing: Brand founders’ investment portfolios point to the future of fashion

December 17, 2021 Mary

This week, an exploration of fashion brand founders’ investment portfolios and what they say about the industry’s direction.

If the last two years have taught fashion industry insiders anything, that’s to prepare for the unexpected. However, there are indicators of where fashion could be going next, including the habits of successful fashion brand founders. Where they’re spending their time and money outside of their core, OG companies is telling — threats of international disasters notwithstanding.

In late November, fashion stylist-turned-mogul Rachel Zoe announced a second fund under Rachel Zoe Ventures, her early-stage venture capital firm that’s been operating somewhat quietly for more than 15 years. The newly launched “Access Fund” allows limited partners, or third-party investors, to get in on RZV’s next investments via quarterly contributions totalling at least $100,000 per year.

Overall, the focus of Rachel Zoe Ventures is tech platforms and innovative companies in the consumer, subscriptions and creator economy spaces. Along with capital, RZV deals include access to Zoe’s personal expertise and complementary resources via her owned businesses and vast network of industry insiders.

Zoe has a good track record, in terms of the bets she’s made on companies thus far. Her active portfolio includes FabFitFun, which reached $300 million in revenue in 2020. Meanwhile the companies that have exited post an RZV investment include NuOrder, Poshmark and Pinterest, among others. The dozen recipients of RZV’s first fund, deployed in mid-2020, include probiotic-focused Seed, which was reportedly on track to see a near-9,000% three-year growth rate by the end of this year’s second quarter, and public safety app Citizen. Zoe said she was using the app before considering an investment.

“I get behind things that I can identify with. Either I can use it personally or I can see the value it would bring to a business,” she said, regarding her investment strategy. She noted that she’s never sought out brands for her portfolio; rather, each she’s invested in has been pitched to her through various channels and connections.

She’s built up quite the network since becoming a household name in the late aughts. She launched her career as a celebrity stylist, a role that was documented on a Bravo TV show, before going on to launch multiple companies. Among them: online style publication The Zoe Report, luxury shopping membership company Curateur and her namesake lifestyle brand, spanning ready-to-wear fashion, accessories and home decor.

In addition to considering what’s personally useful, she lets her knowledge of trends lead investments. ”If the idea for the company hits on a trend in pop culture that people are going to be obsessed with and lose their minds over, I’m interested,” she said.

Among three confirmed companies for the Access Fund is The List, a global e-commerce marketplace providing a curation of luxury fashion and lifestyle products. “I’m obsessed with it. It’s taking all of my favorite things about other things I love, and combining them to create something that doesn’t exist,” she said, describing it as “part 1stDibs, part Farfetch and part The RealReal.”

On the flip side, “When a company’s concept is too complicated, I tend to run,” she said.

Rachel Zoe Ventures is made up of a team of six that includes Zoe’s husband and constant business partner Rodger Berman as managing partner. Berman had an investment banking career in New York that spanned nearly a decade, Zoe said. His “knowledge of finance and business,” combined with her own “on-the-ground experience” make for a, sort of, secret sauce, in terms RZV’s ability to pinpoint brands poised for success. It also enables the firm to secure strategic deals that place value on more than just capital.

It’s an emerging business model that aligns with the evolution of the creator economy. And it’s perfectly suited to month-old Intro, a beneficiary of RZV’s first fund. The platform facilitates one-on-one video calls between anyone seeking advice and an expert in the corresponding field. Intro’s all-star lineup of experts-slash-strategic investors spans the spectrum. Along with Zoe, they include Heidi Zak, founder and CEO of ThirdLove, and Katherine Power, serial entrepreneur and CEO of beauty brands Merit and Versed. They also include NBA player Kevin Durant and comedian Tiffany Haddish. Andreessen Horowitz led its $10 million seed investment.

“Celebrities and influencers are used to getting paid for their brand and their exposure. But they’re realizing that, if they want to be part of [exciting] companies that aren’t billion-dollar companies that can afford to pay for endorsements or posts, then they have to play a different game,” said Raad Mobrem, founder of Intro. “So they’re now allowing companies to [leverage] their brand, while acting more like a tech investor than a personality.”

As for Intro’s fundraising strategy, Mobrem said, “We’re raising capital from not only strategic investors that can help us grow our business, but also people who have incredible access to and influence over others — these are high-price personalities contributing to the brand in an authentic way. Ultimately, it will allow us to have an easier time in this difficult journey of building a company. It’s a little longer game approach, but the rewards are magnitudes bigger than a typical brand deal.”

He said Zoe has been exceptional in her contributions to the company thus far, as she hasn’t just “opened up her audience, but she’s also opened up her Rolodex,” recruiting others to get involved in the company.

Zoe said she’ll always want to “be in the game as a strategic partner,” versus just a capital invstor, as her passions lie in “contributing to the creative, the branding, the marketing and the user experience” of brands.

And she looks for the same level of passion in the founders she supports. “The people who tend to succeed are the people who are so driven by the passion for what they do,” she said. “You can see it – the sparkle in their eyes, the spring in their step, the excitement in their voice. They will win because they’re not going to have it any other way.”

She added, “People like us will find each other in this industry, because the highs are high and the lows are low. You have to have thick skin. And you have to have a community that you turn to when you need support.” Keyword: community.

3 Questions: ThirdLove’s Heidi Zak on her investment strategy

Heidi Zak, co-founder and CEO of bra and basics brand ThirdLove, has angel-invested in a number of female-led, consumer-focused companies. They include M.M.LaFleur, Birdies, Dipsea, Olive & June, The Wedding Shop, Anomalie, Crown Affair, Stix, Our Place, Healthy Roots, Cadence, Intro, Hey Mama and Chairman Mom. Below, she sheds light on her investment strategy.

What founders are worthy of an investment?
“I have certainly made a few investments where I was betting more on the person than I was the business. I call these types of founders “hustlers,” because something about their energy tells you they are willing to do whatever it takes to build a business.”

What drove your investment in expert-advice platform Intro?
“In today’s world, more than ever, almost everyone is craving more connection. Intro has created a platform that builds on this need by allowing anyone to connect to experts across many fields. [The founders] have created a space [for people to] get input, guidance and feedback in real-time, in a truly personalized way.”

How has your experience growing ThirdLove informed your fashion investments?
“I know how hard it is to build and scale a brand from the ground up. I look for [businesses] that solve a specific and real customer need and founders that have great energy and a lot of grit.”