“I always ask myself: What technology am I investing in here? And which business model?” says Shikha Ahluwalia, Principal at Ballerten Capital. Only if fashion tech startups are better than the competition in these two respects will an investment be considered for them.
Balderton Capital

One would think that fashion never goes out of style. The industry is large and relatively crisis-resistant: According to Statista, sales of clothing in Germany alone amounted to around 68.2 billion euros in 2023. The trend is – apart from a slump in 2020 – constantly increasing.

The question is where startups can really come into play in the trousers, shoes and coats business. Unless the founders design and sell fashion themselves. But that would rarely be a real VC case. Fashion tech, on the other hand: is that a thing? Yes, it is: The belief behind it is, first and foremost, the assumption that fashion companies can create a competitive advantage through technology. Tech can be used in a wide variety of areas: in marketing, in operations, in production.

Where does fashion tech currently stand?

However, the fashion company does not seem to be sufficiently clear yet. McKinsey published a global “State of Fashion Technology Report” in May 2022. It says: In 2021, fashion companies would have spent a maximum of 1.8 percent of their sales on technology. But by 2023, the authors of the report assumed last year, the proportion will double. Companies may then want to invest three to 3.5 percent of sales directly in fashion technology. McKinsey further identifies five key areas where tech companies can advance the fashion industry: metaverse, hyper-personalization, connected stores, end-to-end upgrade and traceability.

Source: https://www.businessinsider.de/gruenderszene/business/diese-fuenf-startups-koennten-die-fashion-branche-aufmischen-sagt-eine-investorin/

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