Luxury · Branding

What do you think about investment in premium or luxury brands?

Francisco Romero

April 28th, 2015

For what I've seen around startups investment, most of it is about tech and Internet related projects.
In fact, I haven't seen a specific Business Angels, Private Equity or Venture Capital specialized in the development of luxury brands.
Luxury is a constantly growing industry everywhere with big profits and ROI's. Nevertheless, for many entrepreneurs who want to launch their premium brand, thay have to deal with investors specialized in tecnology or the internet who know too little about the luxury market, its branding or its distribution channels.
I'd love to know what is your experience or your opinion on this.

John Zamoiski Chief Opportunity Officer at ADLarge Media

April 28th, 2015

It has been my experience that the most important requirements for an investor who is considering involvement with luxury brands are:

1. The primary stakeholders in the brand must have experience in the field with an understanding of the marketplace and the channels of distribution. Because cost is high, inventory investment is high and turnover is low in terms of time, the leadership of the company must have the experience necessary manage the brand as a business.

2. The second most important factor is securing channels of distribution that can be relied upon for the long haul. The brand is worthless if it cannot be found at retail. Luxury brands need a showcase where the consumer can see, touch and experience the brand.

3. Securing celebrity endorsement via testimonials and usage are also a key component to the ultimate success of the brand.

The above are three bluerpint items that need to be budgeted for in staffing, sales and marketing as a precursor to seeking investment. With all of these items in line, and a full understanding that the first turn on the products can be very slow as the brand takes hold, it is reasonable to look for investment.

Judit Fabian Seasoned Finance Professional

April 28th, 2015

There are VC's where at least one of the partners is focusing on consumer brands. They should have familiarity with the business models you are engaged in. There are VC's who have invested in cosmetics brands, athletic attire,etc. You just need to find them. Even SV has some of those investors, e.g. Google ventures invested in a high end coffee brand.