Fashwire is a marketplace that allows anyone to have a direct link with fashion designers across the world. This not only democratizes the industry but also helps provide better targeting of demand. Something else: Anyone can invest in Fashwire for its next round of funding. The company has listed the offering on the crowdfunding site, Republic.
The founder of Fashwire is Kimberly Carney (she started the company in September 2015). She had been an owner of a specialty retail store and also had a background in technology. Through this experience, she saw an opportunity to develop a platform that offers low costs and scalability to help designers with discoverability and brand promotion.
So then, let’s get a more in-depth background on the company.
What is Fashwire?
Even with the growth in innovative technologies, the fashion industry remains challenging when it comes to forecasting demand. The result is that there is often excess inventory – and big losses. It also does not help that the market can be quite fickle.
Well, Fashwire thinks it has a solution for this.
First of all, the company has a mobile app, which is available on both Apple’s (NASDAQ:AAPL) iOS and Alphabet’s (NASDAQ:GOOGL, NASDAQ:GOOG) Android. Although, it looks like the iOS app is the most popular, with a rating of 4.9.
Fashwire makes it possible to access more than 250 designers from over 30 countries. There are new ones added on a weekly basis.
With the app, you can upload your own photos that show off your fashion items. Then you can check out those from others. This is done in a Tinder-like fashion, in which you swipe for each of the photos. But there is also a voting feature (a 5-star rating system). And yes, you can then save your favorites or follow other members.
With this process, Fashwire processes large amounts of data – and this makes it possible to provide valuable insights to designers.
The Business Model
As for whether to invest in Fashwire, it is important to note that the company has multiple revenue streams. Of course, there are commissions for the purchases, which can range from 15% to 20%. Then there is revenue from targeted advertising that involves promotions for designers and brands on the platform.
Next, Fashwire charges a fixed fee for providing access to the data. And finally, there is a $2.99 download fee for the app.
Then what about the size of the market? It is certainly large. According to the Fashwire investor profile, the global spending for fashion e-commerce is expected to reach over $972 billion by 2023.
Should You Invest in Fashwire?
Fashwire has already raised $2 million from angel investors. As for the Republic campaign, it has resulted in funding of over $54,000 from 161 investors. The valuation is at $10 million.
However, you will not receive equity initially. You will instead get a SAFE (Simple Agreement for Future Equity) instrument. This means that shares will be allocated to you on a trigger event like an IPO or acquisition.
The crowdfunding round also includes a variety of perks, which are based on the amount invested. For example, if you agree to $5,000, you will have a FashTalks video interview (it will be posted on the website) and quarterly investor updates. Or, if you invest $25,000, then you will get two tickets to a show at New York’s Fashion Week (in September of this year).
Now, as is the case with any startup investment, the risks are definitely high. These types of companies often fail. In fact, when it comes to Fashwire, the company must contend with a highly competitive market. Just do a quick search for fashion apps!
So before making an investment, it’s recommended that you do your own research and analysis.
Tom Taulli (@ttaulli) is an advisor and author of various books and online courses about technology, including Artificial Intelligence Basics, The Robotic Process Automation Handbook and Learn Python Super Fast. He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s. As of this writing, he did not hold a position in any of the aforementioned securities.