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Loose Threads Advisors for Fundraising

Your capital coach.

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We provide emerging companies in the consumer economy strategic guidance for their fundraising process. Our goal is to make your capital raise as successful and quick as possible while maximizing your company’s long-term optionality to scale, sell or remain independent.

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We have an initial discussion about your fundraising goals and expectations.

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Loose Threads completes a fundraising deck and narrative review with actionable recommendations.

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We strategize about potential investors and possible introductions.

For an additional retainer, Loose Threads is available to talk through developments and advise on the fundraising process as it evolves.    


Pricing is correlated to the size of the fundraising round. However, it is not contingent on any deal closing and is to be paid upon Loose Threads’ completion of the work. It is not a success fee.


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Loose Threads Espresso — Your energizing and high-pressure filter for industry news—in context.

Loose Threads Espresso

Your energizing and high-pressure filter for industry news—in context.

Enter your email to read a sample.

Annual Subscription — $90


Monthly Subscription — $9


Subscribers Receive

The Filter

One piece of no-nonsense analysis that examines an important development in the consumer ecosystem, which you can read in five minutes or less.

The Grinds

Quick, to-the-point analysis of five important news stories from the week, contextualized through two lenses: 1) Why is it interesting? and 2) Why does it matter? 

Enter your email to read a sample.

Frequently Asked Questions

Loose Threads Espresso subscribers get one newsletter each week, which features:

  1. The Filter: One piece of no-nonsense analysis that examines an important development in the consumer ecosystem, which you can read in five minutes or less.
  2. The Grind: Quick, to-the-point analysis of five important news stories from the week, contextualized through two lenses:
    1. Why is it interesting?
    2. Why does it matter?

Loose Threads Espresso is $9 a month or $90 a year. You can cancel anytime.  

Yes. Please contact us to learn more.

If you subscribe to Loose Threads Espresso annually and want to upgrade to Loose Threads Membership, we will credit the remaining months on your Espresso subscription towards your Loose Threads Membership. Please contact us if you would like to upgrade since this is currently a manual process.

We made Loose Threads Espresso as affordable as possible for students and professionals. We currently do not offer student discounts.

If you aren’t satisfied with your subscription, you can cancel it on your own by:

  1. Logging into your dashboard
  2. Clicking on subscriptions
  3. Clicking on your active subscription
  4. Clicking “Cancel”

You can also email us and we will cancel it on your behalf.

We want all of our subscribers to be beyond satisfied. If, for some reason, you want a refund, please contact us and we will do our best to accommodate you. All refunds are subject to our Terms of Service.

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Loose Threads 2017 Gift Guide Survey


To evaluate the status of gift guides, we surveyed 15 retail gift guides in our inaugural Loose Threads Gift Guide Survey. It measures gift guides on different dimensions, for example, the prominence and aesthetics of the guides, their filtering and navigation systems and the products and services offered around gifting.

This article is exclusive to Loose Threads Members, who get access to actionable analysis, insights and private events that help you drive growth in the rapidly changing consumer economy.

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This article is exclusive to Loose Threads Members, who get access to actionable analysis, insights and private events that help you drive growth in the rapidly changing consumer economy.

Sample Report: The Private Label Puzzle

Executive Summary

In the 19th century, merchants in the mail-order and wholesale business introduced their own private-label products. The goal was to provide valuable and cheaper alternatives to premium-priced national brands, who significantly marked up their products. In the Mad Men era of the 1950s, national brands built their empires by investing in packaging design, branding, and marketing, which caused the status of private labels to fall. The monotone messaging and aesthetics of private labels didn’t help, nor did their plain names like “Organic Ketchup” or “Great Value.”

When these products sat next to their branded counterparts that featured more creative packaging and had worked for years to get into the hearts of consumers, the picture became even bleaker. Private labels often grow when the economy is struggling, and recede when it is performing. Accordingly, they began to grow again in the late 80’s and 90’s as the recession of the early 90’s took the United States by storm. The category’s growth then halted in the late 1990s as private label products felt severe price pressure and companies lowered prices to compete, which reduced quality. This tarnished private labels’ image even further and reduced sales.

Over the past few years, however, private labels have improved their standing. They are growing at faster rates than name brands—a 4.6% increase from 2015 to 2016 vs. 1.1% increase for national brands. Retailers are infusing private labels with an identity and creating experiences around them, while new players such as Amazon and Buzzfeed are reinventing what private label means today. As a result, the definition of private label is shifting and the lines that divided private label and name brands in the past are increasingly blurry.

This piece looks at:

  • What’s happening with private labels and why does it matter for the larger consumer ecosystem?
  • What does the rise of private labels mean for you and how should you leverage it?
  • What should brands, investors, and real estate developers do to harness the evolution of private labels?


  • Private labels abruptly stopped growing in the early 2000’s after an ascent in the 80’s and 90’s. However, they’ve recently seen a resurgence in popularity as consumers look to fresh options and companies add more complexity and value to these products.
  • Start-ups are increasingly creating products “without the middleman,” successfully marketing some of the benefits of private labels without surrounding themselves with other third-party brands. This approach means creating products with cheaper prices, simpler aesthetics, and fresh ideas.
  • Retailers—and increasingly platforms—are using private label products to increase their revenue streams while giving shoppers more choices and a better shopping experience.

Case Studies

Amazon, Brandless, Buzzfeed, Costco, MeUndies, MoveButter, Sephora, Target, Tide

The Market: What’s happening and why does it matter?

The traditional brand landscape

There are three main players in the brand ecosystem that are worth understanding to determine where private labels are headed: name brands, traditional private labels, and startup private labels.

Name Brands

Name brands—products made by a well-known maker or manufacturer with a consumer-facing identity—are still extremely valuable for the economy: 83% of the products that retailers sell are branded. Their reputation and history provides the consistent quality shoppers need to make a purchasing decision. For example, Tide continues to be the most popular and trusted laundry detergent in the United States. Consumers know what Tide stands for and what its values are, which makes it an easier choice than less-known competitors. This transparency makes it easier for people to understand the messaging and intent behind the brand, unlike murkier private-label competitors whose value and quality is unclear.

Traditional Private Labels

Traditional private labels are products that are packaged or manufactured for sale under the name of a multi-brand retailer. Retailers are increasingly using them as a revenue driver by increasing their sophistication, introducing new and better products into their assortments. Costco rakes in 25% of its revenue from private labels as its Kirkland brand has created a separate identity from the Costco brand. This allows shoppers to frame it as a great brand that they can only find at Costco.

Sephora disrupted the cosmetics industry by changing the way women shopped for beauty in 1998, encouraging them to go from beauty counters at department stores to a more self-service, in-store experience. Women embraced this format—they could now try on multiple brands of makeup at the same time without having to rely on a gatekeeper at the counter. Sephora’s expertise and brand appeal allowed it to create its high-quality Sephora Originals lines along with its namesake private labels. Its latest release is Marc Jacobs Beauty, a line of prestige makeup products with a robust marketing campaign that Sephora helped architect. Its knowledge of makeup combined with its experience selling new and traditional lines to women all over the world has given the retailer the knowhow to successfully launch and sell these new lines at scale.

Other retailers that have created sought-after private labels with sophisticated marketing campaigns or trending products. Macy’s does it with its Material Girl brand and Whole Foods has its 365 private-label brand. The latter has created immense brand value for Whole Foods and gives shoppers a reason to come into the store. Amazon, after its recent acquisition of Whole Foods, is putting a significant emphasis on 365.

Start-up private labels

While name brands and private labels have existed for a long time, startups are entering the space with two distinct approaches: 1) They are choosing to only sell private labels, rather than selling both private labels and name brands; and 2) They are elevating traditional commodities to a new level that is typically reserved for name-brand products.

Private label only

While most private labels were sold alongside other name brands, new startups are unbundling these prior arrangements to only sell private labels. This concept was popularized offline with companies such as Trader Joe’s. As it moves online, companies like Movebutter, for example, have similar strategies. Movebutter is a new private label start-up that calls itself the “supermarket of the future,” which proclaims “When you shop with Movebutter, you pay for good food, not a Super Bowl ad and an expensive physical store.” The design of its products, the simplicity of its site, and the information its gives shoppers—which includes how consumers are saving money and where the company sources its food—promotes this mantra. Similarly, the new company Brandless heralds itself as a high-quality supermarket that sells each item for just $3 and calls itself BrandTax free. Both of these brands only sell their own products.

Infusing commodities with value

At the same time, other brands like Away, MeUndies, and Casper are building brands in product categories that were traditionally fragmented and commodity-driven. Many start-ups use the reduction in overhead and marketing costs that is typically afforded to private label as marketing fodder for a brand that “cuts out the middleman,” a phrase typically reserved for private-label products. These brands are showing how the private label business model and aesthetics have regained their cool and are considered a big growth opportunity. Happy Socks and MeUndies are trying to de-commoditize socks and underwear respectively, coming out with proclaimed-as-superior product experiences, which feature soft fabrics and big brand personalities that bring in a discerning mass-market consumer.

MeUndies sells its products creatively by featuring themed bundles and boxes as well as a monthly underwear subscription service for a discount. According to the CEO of MeUndies, Bryan Lalezarian, younger consumers don’t buy new underwear very often. Its subscription option creates a fun experience for an otherwise monotone chore by sending a new pair of themed underwear every month that helps it on its quest of creating a new behavior among millennials. Other than this, its relentless focus on the product ups its brand equity—consumers rightly feel that the specialized brand creates a superior product.

MeUndies is also starting to create partnerships for its capsule collections. It recently partnered with restaurateur Eddie Huang to create a new design called “Pandamonium,” which was used alongside his image for billboards and other ads. This and other initiatives is working to infuse the brand with more of an identity and personality, creating affinity and loyalty. With 56% of shoppers saying they typically buy their preferred brand regardless of price, MeUndies and its contemporaries are betting that people still hold name brands near and dear to their hearts.

From mass-market to niche private labels

As startups continue raiding the space, bigger companies are responding by creating private labels for more than the mass-market shopper. Instead, they are using private labels to reach different niches who demand a more personalized and exciting shopping experience yet are still price conscious.

Target focuses on simple products and private label

Target is seeing promising results with some of its private brands such as Cat & Jack, a new children’s brand that had over $1 billion dollars in first-year sales. It focuses on products that feature bright colors, whimsical graphics, and clever slogans on large in-store displays.

Even with these big successes, it has revamped its entire private label strategy and is now creating private label brands for specific niches. Driven by its newly created Design Lab, the retailer plans to launch more than a dozen new private labels between 2017 and 2018. The goal is to fight back against its stagnating apparel sales. Each of Target’s private-label brands focuses on a particular niche it wants to attract. “A New Day” intends to bring in women who are interested in discovering new clothes every month and commands an audience similar to that of Zara. The hope is to create energy, excitement and newness around the retailer.

Platforms expand into private label


While private labels and name brands are the two oldest players in the brand landscape, the internet has created a new entrant: the platform-driven private label. With years of experience in the ecommerce space, Amazon has started creating and selling all types of private-label brands on its site. It currently has 29 different private labels. The company has already seen success with AmazonBasics, which competes with its vendors for sales of products like simple home goods, computer accessories, pet supplies, and more. With all of the data and user experience control that Amazon has on its site, its brands are doing well, outselling its competitors in multiple categories. Notably, AmazonBasics has taken one-third of online battery sales and baby wipes from its Amazon Elements line account for 16% of the market share, just behind name-brand items Huggies and Pampers.

Amazon is starting to expand into even more categories like lingerie, cosmetics, women’s apparel and furniture. It has created dozens of niche brands such as The Fix, Ella Moon, Paris Sunday, Arabella, and more. It sells these items alongside name-brand items without indicating that they are Amazon brands. Customers who are looking for fashion items and don’t necessarily prefer specific brand names can opt to purchase these products based on price and style alone. With an unprecedented amount of data on its sites, it has the ability to create products based on holes in the market and to play on trends that are performing well on the site. Over time, Amazon’s private label brands stand to improve as the company tests out different products and continues to optimize them.


Media companies are also starting to create private labels themselves. Buzzfeed attracts 2.3 billion video views a month and has turned the overhead food video into a phenomenon. The company is now leveraging its intellectual property to create private label products in a similar way to what companies like Disney and Universal Studios have done in the past. Buzzfeed has a commerce division called Buzzfeed Product Labs whose sole purpose is to create products that align with the Buzzfeed brand, which is shareable, quirky and far-reaching, among other things.

Product Labs started off by creating Homesick candles (candles that remind people of their home state), the Fondoodler (a cheese gun), a customizable cookbook, and—in summer 2017—the Tasty One Top, a smart appliance meant to help customers seamlessly cook meals in connection with the Tasty app. The popularity of Buzzfeed’s main brand is helping these products succeed and find an audience. With Buzzfeed articles and videos getting billions of views every month, adding the Buzzfeed philosophy and name to its own products has the potential to be very lucrative.

What does the rise of private labels mean for you and how should you leverage it?

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Building brand equity

Private label brand equity is rising as these products are no longer considered stale alternatives to national brands. They are becoming powerhouses, featuring sophisticated marketing tactics, added value, premium lines, partnerships, and whole start-ups around them.

  • How can you freshen up any commodity or stale items you sell by building sought after brands around them? How can you infuse these products with value to make them more appealing to your customers?
  • How can improving or rethinking private labels help you drive the right type of growth? What competitive whitespace can these private labels fill where customers are looking for extra value and want a brand they can trust?
  • Can you partner with other brands to increase the brand equity of the commodities or other traditional items you sell? For each product category, what qualities make brands successful and can you offer some of these as a private label?
  • How can you improve the aesthetics of your private label products? Does it make sense to create premium private labels to fill holes or take advantage of a trend? What if you treated them like named-brand? What would change?

Leveraging intellectual property

Media companies’ Intellectual property is increasingly a valuable foundation and marketing channel for for private labels with context and value around them.

  • What intellectual property, customers, or data can you leverage to ideate new private label products and increase the chances that your private labels find an eager audience? How could your content strategies support these efforts?
  • If you are a private label manufacturer, how can you partner with media companies and create programs that help them create brands around them? How can you give these companies the infrastructure they need to thrive?
  • With YouTube stars and channels redefining media, how can private label companies take advantage of the high-demand for their merch without the manufacturing burden it normally requires? Who could you partner with to assume this responsibility?

Evolving product assortments

Private labels are evolving as competitive retailers recreate their assortments for better private labels and startups create private label hybrids that take commodity products and infuse them with value.

  • What is the optimal mix of private label vs. name brands for your company? What is the target percentage of private label products to name brands that you should sell?
  • How can you use a mix of exclusives, private labels, and start-up brands to differentiate yourself from the competition?


Figuring out what you’re investing in

Potential investment and portfolio companies need to specifically understand where they fall between private labels, national brands, or a private-label startup hybrids that aim to get rid of the middleman.

  • Are companies that claim to take the middleman out of a specific product actually innovating or is there a better way they can create value? Is this approach structurally defensible or is it just marketing?
  • How can the brands you’re investing in leverage private labels’ growth through either creating new branded commodities or using simpler messaging that transparently shows the consumer the value the brand is providing?
  • How will these products be branded and messaged to communicate value but also affordability? In a world with endless choice, how will they stand out?

Using private label to fill market holes

Private label isn’t sleepy like it used to be. These products are growing faster than national brands and filling in holes by becoming premium private labels, value private labels, or private labels that focus on natural or organic products.

  • Where is there an opportunity to create a more premium or high value version of an everyday good? Why does this whole exist?
  • Are there any trends in the consumer landscape that larger brands are passing over for one reason or the other? Which startups can you invest in that are plugging in these holes?

Leveraging loyal audiences

There are opportunities for private labels everywhere as platform companies, media industries, and artists are creating products people crave.

  • How can the companies you are looking at leverage their loyal audiences or communities they have to create an innovative private-label product that already has a built-in audience? This could be a tech company getting into ecommerce or a product company getting into media.
  • How should you evaluate companies that are facilitating the creation of private label products for media companies, celebrities, and other pop-culture phenomena? Will more of this infrastructure need to exist as influence grows and centralizes?
  • How much does scale and reach matter today? Are these existing attributes to build businesses around or can they be built from scratch?

Real Estate Investors

Driving foot traffic in the new economy

People are no longer drawn to retail just because they carry well-known national brands but are also looking for fresh ideas, innovative experiences, and cool products they can get from unbranded private labels and startups.

  • How can you better evaluate e-commerce first companies when they don’t sell well-known national brands? Do they have something else to offer like an innovative product, a loyal fan base, or a smart business model?
  • How can you increase your immediate foot traffic and long-term growth by bringing in more sought-after private label and private label hybrid companies into your mall? What brands help make your real estate a destination?
  • How can you create more unbranded experiences in your malls that will bring consumers back for more? Who can you partner with to create these experiences and possibly sell private-label products in tandem? How could your brand benefit from this setup?

Marketing private label stores

Private label stores have different needs compared to well-known national brands. In order to serve and evaluate these companies you should provide them with personalized resources and use a different playbook to broker deals with them.

  • How can you create marketing campaigns that feature the private labels and e-commerce first companies you carry? How can you use this to make a splash and bring new, diverse people to shop at your stores?
  • Private labels and start-ups like to tell stories and show off their products to lure in shoppers, which may be different from national brands, which rely on their recognizable brand names. How can you facilitate these different needs with your store sizes, display windows, and other architectural features and brand deals?
  • How should you change your optimum store assortment? Are there any old restrictive deals you have with brands that you can change now that the consumer tide is changing?

Going Forward

Purchasing private label products is no longer correlated with economic hardship. Young shoppers are looking for products that provide added value and feature fresh concepts, while also being price competitive. If private labels provide these fresh ideas, increased variety, and premium experiences, they’ll capture attention and have a chance to thrive in the new consumer economy. Additionally, newer platform companies like Buzzfeed and Amazon can go the way of Disney and start utilizing their intellectual property, data, and customers to create a market for products that they know people want.

With private labels growing at faster rates than name brands and retailers putting additional focus on them, it’s clear that private labels will only grow in importance over the coming years. This will continue threatening the market share of national brands and create a new and higher standard for private labels. At the same time, the distinction between branded and unbranded products is only getting greyer.

Excerpt: Fast or Frivolous? How building consumer brands is evolving, accelerating, and evaporating.

Executive Summary

For hundreds of years, the playbook for building consumer product companies has incrementally improved. There have been marginal advances, but the fundamental premise of selling goods locally never wavered.

Then the internet happened, promising to fundamentally reshape the brand-building playbook. Today, there are more brands vying for the spotlight than ever before.

But will the new playbook—and the brands that use it—be as big, successful and long lasting as those that came before it? This report seeks to answer this question by looking into 13 different case studies of brands that started during the 20th and 21st centuries.

We created three different cohorts of brands for this study: Heritage Brands, Digitally-Native Phase 1 Brands and Digitally-Native Phase 2 Brands.

The Heritage Brands we studied, which include Comme De Garçons, Nike, Patagonia, Ralph Lauren, and Victoria’s Secret, all existed before the internet. They were mainly product and marketing companies that focused on designing and manufacturing reputable products, which they would then market and distribute through wholesale or in their own retail stores. Heritage Brands still hold the largest amount of market share, with a combined revenue of $45.5 billion, and live in the hearts and minds of consumers. Longevity is difficult to come by — almost 80% of companies traded on the U.S. stock market from 1960-2009 were gone by 2009. The average Heritage Brand we studied has been in business for 47 years. These early days and milestones provide crucial insights as to why these brands are still in business today.

The Digitally-Native Phase 1 Brands we studied, which include, Bonobos, The Honest Company, Happy Socks, Nasty Gal, and Warby Parker, all started between 2008-2012 and were a product of the internet era. We will refer to them as Digitally-Native Phase 1 Brands. These brands mainly took existing products and ported them over to the internet. They started building the skillsets needed to thrive online and used a digital-first mindset to evolve the core shopping experience. Phase 1 Brands brands have revenues in the low hundreds of millions of dollars, but because of their often sky-high valuations, their viability as either independent companies or potential acquisition targets is still unclear.

The newest brands we studied, which include Allbirds, Casper, and Away, were all founded after 2012 and also started online. However, shopping habits and social media have changed the ecosystem since Digitally-Native Phase 1 Brands launched. Digitally-Native Phase 2 Brands, as we’ll call them, are increasingly focused on building communities around their products and creating lifestyle brands from the beginning. These brands are growing faster, raising more money, and opening more stores than their Phase 1 and Heritage Brand counterparts. They are also performing better than the Heritage Brands did in their early days. Even so the future of Phase 2 Brands as long-lasting companies is still up in the air.

What follows is a detailed analysis of Heritage Brands and Digitally-Native Brands across six different vectors:

  1. How did the brands fund themselves in the early days?
  2. How long did it take for the brands to open their first stores and how many stores did they have after ten years?
  3. How many years did it take the brands to reach $10 million in revenue?
  4. How long did it take the brands to become profitable?
  5. How long did it take the brands to reach $100 million in sales?
  6. How long did it take the brands to run into their first financial crisis?

The best way to understand the new brand building playbook is to look at how it has changed since the old one was written. Only then can one determine the longevity of brands in the new era.


All data in this report comes from publicly reported information, books, and data sources such as Pitchbook. We calculated averages or estimated when numbers from multiple sources differed. Because some of the brands we studied are private companies, we confirmed information to the best of our abilities, which included reaching out to each company individually. Most refused to comment, although we gave each of them an opportunity to.

All of the revenue, profit and acquisition amounts shown below for Heritage Brands and Digitally-Native Phase 1 Brands are adjusted for inflation at 2016 rates.

How did the brands fund themselves in their first ten years?

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Building consumer goods is a capital-intensive business. It takes time and money to develop products, a process which happens long before the first sale. When Heritage Brands were starting out in the 1960s and early 1970s, institutional capital was not nearly as sizeable or available as it is today. These brands had to rely on different and more limited sources of income to bootstrap their companies and prove their worth.

Today, Digitally-Native brands have specific avenues to secure early capital and start building. Low bond yields in the current decade have led investors to flood the equity markets with money, giving venture capitalists more capital to invest than they know what to do with. Investors hope this influx of cash will help companies expand rapidly and dominate for years to come. The difference between the amount of money raised for Heritage Brands and the amount of money raised for modern brands during the first ten years is staggering, with Heritage Brands raising hundreds of thousands in their first few years and Digitally-Native Phase 1 and 2 Brands raising tens of millions.

Heritage Brands

When Heritage Brands were making their names, there was not much potential to quickly scale a brand and capital was much more constrained. Instead, Heritage Brands had to rely on more limited sources of money like savings, bank loans, family money, and operating cash flow in order to start and grow their companies. The type of investment needed to quickly scale a good idea was counterintuitive to banks, who wanted to back riskless ventures and give loans to small businesses that would become profitable right away and consistently pay them back.

Brands didn’t have much money to spend in order to continue fueling growth. They had to be profitable and quickly prove they were building a viable business. Early on, few brands spent as heavily on marketing as many Digitally-Native brands do today making the growth history of Heritage Brands slower and more methodical.

Victoria’s Secret

Victoria’s Secret did not have access to large sums of money when it first started. The idea for the company came about when founder Roy Raymond had to deal with purchasing lingerie for his wife in an old-fashioned department store filled with prying eyes and boring options. He saw a white space in the market and came up with the idea of selling sexier lingerie to the mass consumer in its own separate storefront, which would provide a more exciting and comfortable experience. Previously, shoppers mostly visited high-end stores like Frederick’s of Hollywood for special occasions like wedding nights. However, Raymond believed that the lingerie market could be larger if it were more accessible and thought up the idea for Victoria’s Secret.

In 1977 — the year the company was founded — he and his wife used their savings, money from friends, and a bank loan to get the idea off the ground. With this $322,000, they leased a storefront inside a mall in Palo Alto, California and created a store in the style of a Victorian boudoir. The company made approximately $2 million in its first year and continued to moderately grow, making around $15 million five years later in 1982. At that point, it had four storefronts and a growing catalog business, which helped spur sales. Before the internet existed, catalogs were the primary tool for reaching a national audience without needing to continually open stores.

Through its self-funding, Victoria’s Secret soon caught the attention of executives at holding company The Limited, who had never seen anything like it before. The holding company felt it could make the brand a household name and offered to buy it. Since Raymond was already having growing pains and was in search of additional resources, he decided to sell the brand to The Limited in 1982 for around $2.5 million. (The fact that he sold the business for 16% of revenue is emblematic of the times.) The Limited then poured capital into the store, growing it into the mega-brand it is today.

Ralph Lauren

Ralph Lauren was working as a men’s clothing salesman during the 1960s when he convinced Beau Brummel, a manufacturer, to produce his own line. He started off selling his products at specialty stores and, soon after, at Bloomingdale’s. After testing out the concept, he decided to create his own company with a $366,000 loan from his brother and the clothing manufacturer Norman Hilton. He used this money to design, manufacture, and distribute his new menswear collection, which he sold primarily out of Bloomingdale’s.

Ralph Lauren secured funding, partners and materials through his retail industry connections. Using Bloomingdale’s as a strategic partner and Beau Brummel as a manufacturing partner gave him an initial audience, in addition to expertise and capital. All of this put Ralph Lauren in a good position to sell profitably and grow sustainably in its early days. His unique aesthetic quickly got the attention of the fashion community as his clothes invoked a sense of upper-class American style that was highly regarded. He used this same approach to create a women’s line and other adjacent labels.

Digitally-Native Phase 1 Brands

The brands we studied that were founded between 2008-2012 almost exclusively went for professional and institutional money to launch and grow. They rarely used their own savings or took on debt. Instead, they billed themselves as tech companies — first-movers and fast-growers — in order to grab venture money early on, using terms like “direct to consumer” to play into the investor appetite for “disruption” at every turn. Many of these brands sought to redefine industries they felt were stale, much like Victoria’s Secret did for lingerie in the 1980s. Starting as digital-first companies and wielding the web as a crucial tool was attractive to investors looking to capitalize on the internet revolution.

Nasty Gal

Nasty Gal was founded in 2006 as an eBay store and grew quickly into a coveted brand among young girls in California. Early on, the brand made money by finding clothes from Salvation Army stores and then selling them online for a profit. This worked well since its founder, Sophia Amoruso, had a knack for branding products in a way that drew attention. She would style the clothes, take pictures, add captions and then post the products online to sell to the general public.

In 2008, Nasty Gal had around $215,000 in revenue, growing to $28 million only three years later in 2011. It raised $9 million in venture money in March of 2012, $40 million in August 2012, and then $16 million in February 2015. These consecutive infusions of capital forced a nicely growing business to hyper-scale since investors needed a big return in their expected fund lifecycle of seven to ten years. This transformed the company from one focused on profitability to one focused on rapid growth at all costs. This would prove ineffective and lead the company into turbulent waters, which is further discussed in the Financial Crisis section of this report.

Digitally-Native Phase 2

Brands founded after 2012 view themselves as companies that can scale even more quickly than their Phase 1 counterparts. They raised more capital more quickly to realize this supposed advantage.


Casper raised money right in the middle of the Digitally-Native boom, calling itself the Warby Parker of mattresses by delivering a superior product at a cheaper price. It raised institutional capital from the beginning, starting with $1.6 million in January 2014 and then another $15 million a few months later. Its valuation ballooned from $7 million to $59 million and its revenue reached $30 million by the end of the year. This money,strategic prowess and never-ending subway advertising resulted in the company becoming the top-of-mind choice in the easy-delivery mattress space, even though similar competitors already existed in the marketplace.


The founders of Away also came of age right in the middle of the Digitally-Native boom. Steph Korey and Jen Rubio worked at Warby Parker in 2011 and helped the company grow from 20 to 300 employees. They felt that the future of retail was direct to consumer, so they looked for another category in which to cut out the middleman.

With their hope of growing fast and disrupting the travel industry, venture money was a no-brainer. This additional capital would help them leapfrog into a bigger business with the potential of owning a piece of the overall market. Away raised $2.5 million at a $7.2 million valuation in 2015 before it sold any product. It followed with $8.5 million at a $40 million valuation one year later and then $20 million at a $120 million valuation in 2017, with $28 million of revenue.

The founders have admitted that they raised more money than they were looking for, evidence that there is an abundance of capital available to brands in the current landscape.


  • How do phased funding rounds change the strategy of the company? What are the risks associated with raising excess capital for growth in early stages? What are the necessary steps that an early brand should focus on to build brand awareness and sales?
  • What would it take for young brand founders today to build up the business acumen to create billion-dollar businesses from scratch with less invested capital? What affect would this have on the brand, the founders’ equity and the employees stock options?
  • What does a high valuation predict in terms of long-term investment potential? Can investors expect returns based on valuation? If not, what are the leading metrics for financial return?
  • Are Digitally-Native Brands spending more money than they need to by selling only direct to consumer and ignoring wholesale? Is it possible to acquire customers sustainably without wholesale?
  • Is the idea of cutting out the middleman overplayed or is it actually something that can help grow these businesses into successful competitors?

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