Crowdfunding may be right fit for fashion startups

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Ellen Huet
Updated 9:05 pm, Friday, January 3, 2014

Marin Camille Hood and Julia Zolinsky had a plan. The two women, who both live in Oakland and work as museum fundraisers, were breathing life into a years-old dream of Hood’s: a vintage lingerie brand called Blackbird Underpinnings, inspired by styles of the ’20s and ’30s.

“We came up with a budget, which led us to the decision: We need startup capital,” Zolinsky said. “Where are we going to find that?”

Hood and Zolinsky turned to crowdfunders. They raised $40,765 in a month and haven’t even picked a factory yet. They hope to send funders their rewards – lingerie from the line – by March.

Crowdfunding has been around since 2008, when Indiegogo was started in San Francisco. Since then, several similar platforms, including Kickstarter, have allowed people to back projects such as indie films, first-run tech gadgets, political campaigns and fundraisers for cancer treatments.

Now, interest in crowdfunded fashion is on the rise: Kickstarter said backers pledged almost three times as much money last year as in 2012 to fashion projects (both successful and unsuccessful), and more than 60 times as much as in 2010, the company’s first full year. Thirteen times as many fashion campaigns were launched in 2013 as in 2010, though fashion campaigns remain the least successful project category on Kickstarter.

Indiegogo would not provide more detailed information but said that money pledged toward fashion projects on its platform grew 500 percent in the last year.

Crowdfunding is a particularly comfortable fit for manufacturing: Every item is pre-ordered, so no brand needs to guess how popular gray pants will be in 18 months. The idea is so alluring that some designers are making custom crowdfunding platforms to keep up the cycle without giving a cut to a third party.

“Fundamentally, no fashion brand ever lines up supply and demand,” said Josh Gustin, whose men’s denim line began on Kickstarter and continues on a custom crowdfunding site at www.weargustin.com.

“If you line up supply and demand, you give people a voice into what we make, and it eliminates all waste,” Gustin said.

Part of crowdfunded fashion’s rapid growth has been on the tails of crowdfunding’s overall rise. As it has become more popular, more people think it’s their magic ticket to introduce a new product – and the reality can be harsh.

“Crowdfunding is not a field of dreams,” said Indiegogo founder Danae Ringelmann. “It’s not put up the idea, walk away and watch the money run in. It’s an active, involved process.”

Fewer than 10 percent of projects on Indiegogo reach their set funding goal, according to the Verge. (That’s tempered by two facts: Indiegogo accepts any kind of project, and projects that don’t reach the goal still get the money raised so far.) On Kickstarter, about 45 percent reach their goal, and only then do they receive funds. About 25 percent of submissions are not accepted because they don’t fit into one of Kickstarter’s 13 creative categories.

‘Basically didn’t sleep’

Gustin said he and Powell “basically didn’t sleep for a solid three months” and worked full time before and during their Kickstarter campaign. Hood and Zolinsky prepped for a year and a half before the campaign, then hosted an event mid-campaign to build buzz even more. “It was incredibly labor-intensive,” Zolinsky said. “A Kickstarter is a job.”

And it can be expensive. Platforms take a small cut of funds, as do the payment-processing companies. Zolinsky and Hood had to fundraise for their fundraiser: They solicited seed money from friends and family and spent $7,000 to make samples, hire models and a videographer, and host the mid-campaign event.

Michael Paratore, a Mill Valley corporate lawyer, quit his job to sell leather sandals called Mohinders on Kickstarter. He spent about $2,000 on the campaign and its video and made several sourcing trips to India, a luxury he knows he could afford only because his wife is able to support both of them.

Source : http://www.sfgate.com/style/article/Crowdfunding-may-be-right-fit-for-fashion-startups-5111648.php#photo-5666008

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