SHAPE-SHIFTING BRA’S CREATORS AIM FOR RIGHT FIT WITH INVESTORS
Explaining the intersection of tech, fashion can be challenging
When Stephania Stefanakou and her co-founders, Jacob John and Leen Al-Taher, pitch their House of Anesi product at engineering startup competitions, chances are they’ll end up winning.
They have the right ingredients in place. Two are engineers by training; the third a communications specialist. Their product is innovative and fills a market need. And their market research is thorough.
But when it comes to explaining their idea to investors, it can be an uphill battle. That’s because their solution is not a typical software or hardware play. It’s a women’s bra that is designed to shape shift to accommodate changes in an individual’s breast size in response to hormonal changes.
It’s the engineering aspect of their design that put them on the winning track with competition judges, she says. “A lot of our competitors were software or hardware startups. But we knew that in order to make innovation in this world, it needs to be viable and help people.”
The idea came from a 2015 Ryerson University Sandbox hackathon, where competitors were asked to come up with a business idea that merged engineering and fashion. Since then they have raised $87,000 through various grants and awards, and are now launching a crowdfunding campaign.
While getting seed money has gone well so far, explaining the concept to the investment community is another story. Stefanakou says when pitching in bigger competitions and talking with angel investors, “it’s almost always guys. Any female investor we have found isn’t interested in consumer products and only invests in women in tech.”
She has learned that the best goto approach with a male audience is to show the engineering and tech side of the design. “That’s what they care about … and how well I know my financials.”
When pitching to women consumers, it’s a completely different conversation, she adds. “They don’t care about the tech. They care about what they get out of it.”
Engineering and fashion are not mutually exclusive these days, says Andrea Romero, manager at Ryerson’s Fashion Zone, which builds interdisciplinary collaboration between the technology and fashion and retail industries. “Some who come here know nothing about fashion, but are working in machine learning, AI, augmented reality or blockchain and looking for ways to develop viable products.”
She can cite many non-fashiontrained entrepreneurs that have gone through the program, such as business professional Joanna Griffiths of Knixwear, developers of sweat-resistant women’s underwear; or Noura Sakkijha of Mejuri, an engineer who manufactures custom jewelry based on submitted designs from people around the world.
The good news is there is an emerging group of VCs that are focusing on consumer markets, from retail to fashion tech, including Campfire Capital, which was founded by a team of Lululemon professionals; Imaginary Ventures established by Net-a-Porter founder Natalie Massenet; and Arlene Dickinson’s District Ventures fund.
The main challenge for a startup in the consumer space is validation, which means showcasing the numbers that count, Romero says. “Once you launch a Kickstarter campaign and have funds under your belt, then you have a story to tell investors. Proof of concept is everything. You need to have at least $500,000 in sales to get any attention.”
Many in consumer products generate initial sales with Facebook ads and digital marketing, she explains. “If you have invested in that and show a great ROI from online, investors will look again.”
When pitching a product in a market that’s unfamiliar to investors, she also advises startups to tailor their pitch to their audience. “If they have a tech background, speak their language. You can’t confuse them or you will lose your pitch in the first sentence. A fashion or retail audience would be an entirely different discussion.”
Regardless of your audience, the key is to pitch your business not yourself, Dickinson advises. “Be sure to know your numbers. What are your sales and margins? What is the market size and market potential for the product? What is your distribution? Do you have a sustainable supply chain? What is your monthly burn and projected revenues? What is your growth strategy, and how much will it cost? Focus on delivering a business case for investment that demonstrates your passion for the business, your focus as an entrepreneur, and the strength of your company.”
What has helped House of Anesi is the team’s dedication and the amount of market research they did, Stefanakou says. “A product can be super amazing and innovative, but if it doesn’t make sense to your audience there’s no point.”
Once you launch a Kickstarter campaign and have funds under your belt, then you have a story to tell investors.