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Funding the fash frat

IN CONVERSATION

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Anoothi Vishal New Delhi
Last Updated : Feb 14 2013 | 7:29 PM IST
about the risks and rewards of investing in fashion when he visited Delhi last week for the Wills India Fashion Week.

What exactly is the Centre for Fashion Enterprise?

At present, there is no culture of venture capital financing in fashion. For instance, in India, I believe that most designers use their own funds to grow their business. Even the world over, usually, a designer would take a loan from the bank. One reason why venture capitalists are reluctant to invest in a designer is because fashion is traditionally seen as frivolous and designers as flaky. The risks, particularly the management risks, are seen to be very high in fashion.

I was in the IT sector but three years ago, as an experiment, I started the Centre for Fashion Enterprise to help start young fashion designers based in London. We only take up those with a potential to become high profit businesses not people who will be content to do well but only at the mid-level because that will not work for us as a business proposition. Ours is a non-profit initiative funded by the local government in London with two million pounds three years ago...

You are talking of fashion being a high risk business, so how do you minimise those?

We follow the model of the film industry. In a film, the roles of the director and producer are completely separate. A clear segregation of roles is vital. When we sign on a designer, we make it clear that a team of professionals will be managing all the business, the designer must focus only on his creativity.

The risks may be high but the returns can be very high too. If you look at the luxury sector, some of the biggest firms in the world are in that sector. From the 70s, there has been a steep increase in the value created by these companies. Fashion is part of the same sector.

You have signed on Manish Arora...

Manish has the potential to be the first Indian global superstar brand. We used to look at London-based designers only, but this was limiting. So, last year, we decided to include anyone willing to relocate the core biz to London. We will be helping Manish with the relocation as well.

What do you help the designer with? How much money do you put in for each?

Everything from studio space to marketing and the entire packaging... We take up each designer for two years and our aim is to raise the sales from zero to £100,000 sales in two years. We put in £60,000 for each designer in return for a 10 per cent equity stake in their business.

Apart from Manish, who are the other designers you are currently managing?

We have 10 interns at a time. We assume one of these will be a star, two will be profitable and the rest will never make it! We have Basso and Brooke, a Brazilian-British pair. They were selected through a competition and are the fastest growing fashion designers in Britain, going from zero to $2 million in a year. We also have Charlotte Vasberg, an accessory designer, who does high end bags.

What do you look for before you sign someone up?

Since this is a purely business decision for us, we don't just look at the creativity. A designer should be part of a team with the potential to do good business. Manish has a brilliant business partner in Deepak Bhagwani. A designer should be not just good but also what I call "blessed", have a standing in the media, in the industry, have some reputation... I look at all these factors since business depends on all these not just an individual's creativity. Since we are looking only at high growth companies, the person should have shown some early gumption...

Do you think Indian designers have takers in Europe?

What is happening to Indian and Chinese design is similar to what happened to Japanese designers in the 1970s and 80s. That was the time when Japan was rising economically. Now, it is India and China. Cult power rides on economic power.

Finally, a last question: who are the Indian designers you liked, apart from Manish Arora of course?

Ashish Soni and Sabyasachi (smiles). When we sign someone on, you'll be the first to know.


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First Published: Apr 11 2006 | 12:00 AM IST

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