Unicorns in the fashion world are a rare thing. In fact, go back 20 years and it would be difficult to find a startup in any industry that had surpassed the $1 billion valuation mark. For technology startups in Silicon Valley, Unicorns aren’t so rare. There are companies like Uber, Dropbox, Snapchat, and Pinterest who have all surpassed that magical figure, and there are plenty more lining up behind them.
Investor confidence in technology is at an all-time high, so why does it seem to be so difficult for fashion companies to hit the same levels of success? Sure there are established fashion houses and ecommerce companies that have valuations in the tens of billions, just take Gucci as an example, but for a startup it seems that the road is much more difficult.
If we were to seek startup Unicorns, we would be limited to a small handful. Companies like Farfetch, Warby Parker, JustFab, and Trendy Group are all up there, but they’re part of an exclusive club, and it’s one that is difficult to break into. One thing that is particularly interesting, is that most of the startups in the tech world are all located around the same area; Silicon Valley in the San Francisco Bay Area. Surprisingly, not a single top valued fashion firm hails from the Bay Area. Many would assume that with the growing links between fashion and technology, Silicon Valley would be the perfect home to a high tech fashion firm. The few companies that are there, Mod Cloth being an example, are not amongst the biggest in America. With all of the venture capitalists focusing on the region, it is a confusing fact.
One of the reasons why fashion companies in San Francisco fail to make it to the lofty heights of Unicorn status is because investors in the area simply don’t have confidence in the fashion industry. This is largely due to investors having little knowledge of the industry, or even an understanding of the benefits. Part of the blame could be on the fashion companies themselves. Most of the fashion Unicorns are more retail than fashion. They’re ecommerce businesses that made it big with a proven online sales model. In large part, what they do is no different to businesses like Amazon, with the key difference being that they are focused on fashion.
Perhaps fashion innovators need to look to the parallels between fashion and technology, and incorporate them into their business models. This could mean leveraging from an already thriving investment industry, and even leveraging from the talent around them. Imagine a company that partnered with Google to deliver haute couture inspired smart devices that use technology from Google Glass or Android Wear. As yet, no one has approached wearables from a fashion perspective. All of the smart devices out there today are only technology that has been made pretty. New ideas could bring fashion and technology closer together, and possibly open up bigger investor interest for startups.
There’s more than $1 trillion in the global fashion market. There are opportunities there for those who think outside of the box. As has been seen in the tech world, the fashion companies that disrupt the market and innovate are the most likely to succeed. Is there a startup out there that is up for the challenge?
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