In India’s apparel and textile industry, start-ups are strongly present across many segments and dominate in B2B, B2C marketplaces and D2C brands. These small to giant start-ups get funding of millions of dollars from global venture capital firms as well as Indian investors. Interestingly, there are a few angel investors who have deep understanding and involvement in apparel manufacturing and retail. Vineet Gautam, CEO, Bestseller India; Ananth Narayanan, Founder, Mensa Brands; Anand S Ahuja, MD, Shahi Exports; Pallak Seth, Founder and Vice Chairman, PDS Limited and Neeraj Goenka, Director, Texport Industries are a few of them. Apart from funding, the guidance of investors is also highly important for the start-ups and it is here that these sector-specific experts add extra value to the start-ups with their know-how, experience, network and overall understanding of the apparel trade.
Funding to variety of start-ups
As far as funding by the apparel industry stalwarts is concerned, several start-ups have been benefited by them. Vineet Gautam, a retail virtuoso, has invested in B2B marketplace Groyyo and luxury fashion omnichannel e-commerce platform Purple Style Labs. Anand S Ahuja and his wife Sonam Kapoor Ahuja (having own fashion brand Rheson) support the leading marketplace Fashinza. Pallak, an angel investor since 2010, loves supporting ambitious founders in solving market frictions and leveraging technology as an angel investor alongside trusted partners. He has co-invested alongside Sequoia Capital, Sierra Ventures, Social Capital, Storm Ventures, Sherpa Ventures, etc., and helped entrepreneurs through customer, co-investor and partner introductions.
Push to invest in start-ups
Investment in start-ups is naturally the preferred choice by the apparel industry-based stalwarts as platforms like Fashinza and Groyyo have gained momentum due to Covid disruptions, and with strong tech-base, the future is definitely of B2B marketplaces. People’s thrust on sustainability increases the scope of renting platforms for designerwear Stage 3 while luxury business and that through omnichannel is normally growth-oriented. Rapid growth of start-ups like Purple Style Labs achieving 50x growth in the last 4 years is further motivating the industry stalwarts to invest in them. Overall from bootstrap to various rounds of funding, the performance of start-ups and their execution of an idea is a significant aspect for investors.
Anand’s prominent investment areas are internet marketplace and e-commerce but at the same time, he is a vocal supporter of sustainable fashion. His funding to Fashinza exemplifies his support to marketplace and sustainability as Fashinza claims to take every step to diminish its impact on the society and environment. Its partners are encouraged to use sustainable fabrics produced without the use of harmful chemicals.
Another leading person of the industry who is also an investor is Neeraj Goenka, Director, Texport Industries and Co-founder of The Robert Graham brand. Having good exposure to apparel export as well as international retail, Neeraj has invested in five start-ups of the apparel domain. D2C brand aggregator GOAT Brand Labs, Threadsole (acquired by Coats) software solutions are a few of them.
“All five start-ups related to apparel industry to whom I have funded are doing well. I am very bullish about start-ups in the apparel sector and especially the B2C segment as I believe that B2B is comparatively a difficult category and B2C has more scope. For me to invest in any start-up, the most important thing is a product. It has to be appealing as well as should be for masses and scalable,” says Neeraj who also remained in the board of Venture Nursery (VN), India’s first angel-backed start-up accelerator. He is also a member of Indian Angel Network since 2013.
Value added by apparel industry experts
Funding to early-stage start-ups allows an investor to reap maximum benefits from a start-up’s ideas. Unique ideas with innovative answers to real-world issues, product uniqueness, market opportunities and scalability are some of the core areas for an investor. Along with all these aspects, team and overall management of start-up is also highly important.
And against the investment in start-up, on an average, investors hope to get at least five times (normally in 3-5 years) of what they have invested. Investors take a higher risk when making the decision to invest and part of this risk is also the potential failure of a start-up, which will result in the investor losing some or all of his/her investment. In this entire scenario, guidance by investors plays a significant role in the growth of start-ups.
Neeraj shares that being from the apparel sector, he surely adds extra value to the start-ups especially related to the manufacturing and sourcing front which saves their time and resources and increases the opportunities for them. Overall it makes things easy for them.
Not just angel investors
Though there are mainly angel investors having background of apparel industry, apparel giant company PDS Limited, having revenue of US $ 1.185 billion, is actively making investments in early-stage start-ups that offer a variety of solutions across the fashion supply chain. “Some of the investments include a tech-driven approach to grow premium sustainable cotton with 80 per cent less water and fertilisers; a brand rating platform that makes it easier for consumers to shop ethical and sustainable fashion and an intelligent business network that drives more sustainable business practices,” the company says in its annual report.
The early stage investments of PDS are to foster the development of agile solutions for the future. Investing in opportunities that are in sync with our focus areas helps future-proof enterprise and create value for the long-term. Through PDS Venture Tech Investments, it has three collaborations – True PDS Fund with a major focus on sustainable and digital-first fashion and consumer brands. Apex Black VC Fund is for AI/ML backed deep tech companies working on scientific breakthroughs and business model disruptions.
Similarly, PDS Impact Fund in association with Yellow Octopus is a Circular Fashion Impact Fund focused on investing in sustainability across the fashion supply chain. The company is also partnering with leading funds for co-investing in select opportunities.
It has invested in Filkor Limited, which developed a product destruction process that allows for high-end fashion houses to transform their waste and surplus stocks into a granulate that is then upcycled 100 per cent into a variety of further uses like brick slips, shop fittings, and other artistic and functional objects. Few of the digital-first consumer brands have also got investment from the company like Bedfolk, Maude in overseas. While in India, it has invested in Mumbai-based Verandah, a line of conscious luxury resort and swimwear.
