Business of Fashion's $2.1 million seed round: A case of perfect timing?
London-based Business of Fashion is a new new-media story, emblematic of an emerging era of publishing in which at least some investors are willing to bet that a news-driven company can be profitable. Even as Time Inc looks like it will be taken over by Meredith and Newsweek goes solely digital, venture capitalists, led by Index Ventures, have decided to invest $2.1 million in what six years ago was just a blog and an email newsletter.
Business of Fashion has amassed a lucrative audience – fashion industry insiders and high net-worth fashion-interested consumers – by being a go-to digital source for frequently updated fashion news and insights. But as much as the site’s founder, Imran Amed, has built the early success of the publication through hard work and passion, he has also benefited from fortuitous timing.
Amed says that when he started the site in his apartment in 2007, it was just a personal project meant to engage the creative side of his brain after leaving a career as a management consultant. "When I first started writing this from my sofa about six years ago I had no idea the journey I was about to go on,” Amed says.
It just so happens that his journey coincided almost perfectly with the biggest tectonic shifts in media of the last century – if not ever. Business of Fashion launched a year after Facebook opened up to everyone, not just college students. It arrived a year after Twitter launched, and a couple of years before the microblogging service started really becoming important. It also launched in the same year as the iPhone, marking the beginning of the smartphone revolution, which has, of course, turned into the tablet revolution.
If you were a media company hoping to ride the wave of digital developments, you couldn’t have picked a better time than 2007. With a shoestring staff of two part-timers and himself as owner-operator-editor, Amed has grown Business of Fashion from a blog into a multi-platform company, taking advantage of social sharing and digital video to enhance the product and reach more readers in new ways.
Just as he was early to start live-streaming interviews via YouTube (in 2010), and has experimented with Facebook – first with Groups, then applications, and finally with Pages – Amed has found ways to capitalize on the potential and capabilities of new digital tools just as they become popular. Take Twitter, for instance. "The social media tool that really changed things for us was Twitter," he says. "Twitter is our live news feed. I'm sharing insights or images or anecdotes, experiences I'm having as I travel around the world." Business of Fashion has almost 600,000 Twitter followers.
Now Amed is also tapping into Instagram and Vine, both of which lend themselves well to fashion, he says. It’s early days for Vine and not many in the industry are using it yet, but he sees great promise. The short-video tool resonates because it’s image-based, but the really compelling part is that it produces six-second clips, he says. “It’s something people can really experience in a moment.” If he uses Vine at a fashion show, he can capture between 12 and 15 of the models, which allows him to share a flavor of the entire collection.
Amed says all the digital media developments have been “incredible” for Business of Fashion, and that because of the continual release of new products and updates, “We are in a constant state of flux.” But that is also a big reason why he decided to raise money.
“It feels like digital media is at an inflection point right now,” says Amed. “There seems to be a shift happening in terms of the confluence of mobile, mobile phones, tablets, and the way people consume information.” That shift helped convince him that the publication can grow into a serious business.
Until now, Amed has employed a part-timer in New York, one part-timer in London, and relied on contributions from an international network of freelancers. He plans to use the investment money to bring the team under one roof in London – he’s renting an office in Soho for the purpose – and to staff up, not only in editorial, but also on the technology and business sides.
To coincide with its funding announcement, Business of Fashion also relaunched its site today with a new design. Rather than build apps for various platforms, it is relying on the open Web, favoring a responsive design that adjusts the shape and layout according to the size of the user’s browser. Responsive design, of course, is another of those new new-media developments that has opened up new potential for publishers.
Aside from Index Ventures, investors participating in the funding round include Samos Investments, Carmen Busquets, Novel TMT Ventures, and Advancit Capital. One investor, however, throws up a potential challenge for Business of Fashion. As The Next Web has pointed out, LVMH – a luxury goods and fashion group that combines the brands Louis Vuitton and Moet Hennessy – also partook in the round.
Business of Fashion will have to be careful to avoid charges of a conflict of interest in that particular case, given LVMH’s deep stakes in the fashion industry. The Next Web calls this a “Pando problem,” alluding to PandoDaily’s backing from venture capitalists. To neuter such criticisms, Business of Fashion should be upfront with its disclosures whenever it covers news related to LVMH.
Business of Fashion will also have to be careful with how fast it grows. While $2.1 million seems at first like a lot for a media company seed round, it will disappear quickly when it comes time to paying rent in Soho and covering the salaries of tech and business staff. As the company attempts to scale, Amed may well find himself wishing for the times when the super-lite masthead made it easy for the publication to stay nimble. At the same time, without the investment, it's unlikely Business of Fashion could grow much beyond the level it has already reached.
The pressure is also now on the company to start making real money. Amed says he plans to experiment with sponsored content, premium content, a jobs board, and conferences. "It's about monetizing this great community that we've built," says Amed.
The trick will be to do that without making the community feel like it's the product – a very new new-media problem.
[Photo by mandiberg]