Generation Z, a concept that refers to people born from the mid-1990s to the early 2010s. They are not only the main force in the current fashion luxury consumer market, but also with their unique value orientation and investment philosophy, they have become the "new Bole" in the field of fashion investment, and have stimulated a new round of fashion investment boom.
According to a survey by wealth management group Charles Schwab, about 16% of new retail investors during the pandemic were Gen Z. In addition, in the past year, many venture capital firms have grown significantly, with thousands of young Generation Z investors joining. Investor metabolism will always spawn a series of chain reactions, from the type of investor who wants to be invested, to the dimension of the investee being evaluated, it is possible to change course.
In China, the most out-of-the-loop young venture capitalists are Yu Wan. After studying fashion management and investment overseas, Yu Established Yu Capital, an investment institution focusing on fashion, technology and lifestyle industries, in 2015. According to official sources, the agency is committed to investing in a growing company with the potential to become an industry leader, with excellent teams and rapid development on a global scale.
Late nights
Yu Capital's first investment was in British fashion accessories brand Bottletop. Founded in 2002 by Cameron Saul, son of Oliver Wayman and Multiberry founder Roger Saul, Bottletop adheres to a sustainable concept and employs artisans to create fashion accessories from recycled materials. The company also uses the proceeds to fund the operation of the Bottletop Foundation to raise funds for educational programs that address adolescent health issues such as HIV/ AIDS, substance abuse and pregnancy. Yu Capital has a rich and diverse fashion portfolio, in addition to Bottletop, the women's wear brand Cefinn founded by the former Prime Minister's wife Samantha Cameron and the "Queen of Print" Mary Katrantzou's eponymous designer brand are involved.
As a post-90s yu evening is not strictly speaking a Gen Z group, but its investment logic can still be used as an effective sample to understand the preferences and orientations of young investors to some extent. She has said in interviews that she focuses on three factors before making investment decisions: the brand's DNA, potential and team.
Mary Katrantzou
Yu Wanwan believes that in a market with a large number of consumer choices, a brand must first have a unique DNA to be recognized and remembered, so as to successfully absorb a highly loyal customer base. Secondly, whether the brand can cope with the changes in the entire Chinese market and meet the preferences of a new generation of consumers will also affect the ceiling of the growth of the entire brand. The last thing to think about is whether the brand team can maintain the balance between product innovation and commercial profits, Yu Wanwan pointed out, "How to make innovation and business perfectly combined, this is actually a bottleneck encountered by many designers." ”
In addition, some insiders pointed out that the brand founder is also a particularly important part of Gen Z investors. After the brand grows, it is inevitable that the founder will have to deal with the traffic that flocks to the outside world. Therefore, whether the founder's concept is clear and distinct, whether it is unique and whether it can be recognized by the public consumers, etc., will profoundly affect the development trend of the brand. A product consumption is actually a concept transmission from the founder to the consumer, only if the two sides can form the same frequency resonance, the consumer may transform into a powerful voice point of the brand, and continue to output positive word of mouth to pull the brand's popularity and reputation.
Today, the only brands that stand out in a crowded market are brands that can build a circle culture with consumers. Brands build a highly sticky community by creating original content that expresses their own ideas beyond products and deepening consumer acceptance. Nik Sharma, founder of Masala Capital, said that brands that can quickly get investment basically have their own high loyalty consumer base, "other companies may produce the same product, but they may not be able to replicate the brand and the community."
Compared with the previous generation of investors, Gen Z investors will not simply be guided by performance figures, but will be more inclined to choose brands that are in line with their own values, which is the same as their consumption habits. According to a study by online service agency GreenMatch, Gen Z people show a more pronounced "consumer activism" (using collective purchasing power to express political opinions and improve social conditions) compared with the previous generation. The report shows that Gen Z has a better liking for brands that take initiatives to take sustainability initiatives and are ethically responsible, and that these values are more important than prices, with 90% of Gen Z saying they will shift to other brands because of different values.
Gen Z will prioritize brands created by their peers when investing, will be more empathetic to investors, and will be more inclined to adopt a faster pace and more casual way of communicating. It has been reported that when Gen Z investors sincerely recognize a brand but cannot meet its minimum capital requirements, these investors will use various means on social platforms to improve the visibility of the brand, hoping that the brand can enter the line of sight of large-scale investment institutions.
As capital flows more and more frequently into brands created by Gen Z, many investment institutional teams have now increased the proportion of Gen Z. Gen Z employees say Gen Z investors have a unique perspective that is valuable to any venture capital firm looking to invest in the next generation of technology businesses or other areas, and the diversity of Gen Z investor composition allows them to provide more effective strategies for their investees.
Along with the strong rise of Gen Z investors, capital is gradually optimistic about the fashion industry.
In fact, the fashion circle has never lacked entrepreneurs, from independent brands, to buyers, to fashion e-commerce, etc., each segment has a steady stream of fresh blood. However, fashion is rarely regarded as a mainstream business trend by the outside world because of its high-end attributes, so it is difficult to be hyped up and sought after as a huge venture capital outlet. Among them, the apparel industry has been rated as "the industry forgotten by capital". Under the background of the financial industry and the Internet industry with hundreds of millions of financing scales, the situation of the apparel industry is even more bleak to the naked eye, and the difficulty of financing and the small amount of money have become a tacit fact in the industry.
Some analysts pointed out that the reason why the apparel industry has not been favored by capital for a long time is mainly because clothing is essentially a traditional industry, the technical content is low, and the market is relatively stable. In contrast, high-tech industries with clear profit prospects are more likely to be favored by investors. But with the change of consumption pattern, the east wind of the times has slowly blown to the fashion industry, and now even investors in the non-fashion field have begun to enter the fashion industry.
Last year, China Securities News reported that the domestic apparel industry is facing "old trees sprouting new shoots", attracting Hillhouse Venture Capital, Huaying Capital, Wuyuan Capital, Legend Capital and Matrix Partners China and other institutions are quietly entering the apparel industry. Driven by the strong momentum of new consumption, not only clothing brands, but even the supply chain link of the apparel industry have ushered in intensive financing.
In September last year, the hundreds of millions of yuan B+ round of financing completed by emerging clothing brand Bosie attracted widespread attention in the industry. It is reported that the round of financing was led by Station B and Wuyuan Capital, and followed by GSR Venture Capital. Founded in 2018, Bosie is a non-sexist clothing brand. The reason why he chose to use "genderless" to cut into the apparel industry is because founder Liu Guangyao found that with the rise of women's power and the amplification of galvanist calls, the young groups represented by generation Z have undergone obvious cognitive changes in gender boundaries, and the trend of clothing that tears off gender labels continues to be popular.
Bosie
The senior investment manager of Bosie investor Wuyuan Capital once said in an interview that China's 2 trillion yuan clothing market has been in a discrete state for a long time, and lacks a high-quality supply of goods that can provide both beauty and cost performance. Bosie focuses on the under-25 customer base, its series fully meets the diverse needs of young people, and in only three years from 0 to achieve hundreds of millions of revenue, is a brand with great potential. Ai Xiao, vice president of Tsingshan Capital Investment, another investor in Bosie, also pointed out that Generation Z has obvious circle characteristics, style and aesthetic are very diverse, focusing on self-expression, such as Bosie's diversified style and the Beyond boundaries concept advocated by Bosie is the embodiment of a new generation of young people breaking the norm.
Some insiders pointed out that the domestic brands that successfully obtained financing last year have two significant commonalities. The first is that most brands are focused on subdivisions, such as Bosie focusing on genderless clothing, Bananain Banana, Particle Fever and Twelve Lightyears focusing on lingerie, sportswear and Hanfu respectively. Secondly, these brands all pay special attention to the shaping of personalized style, targeting the younger generation who emphasize themselves. Generation Z grew up in a period of rapid Economic Development, has almost no experience of material deprivation, and although they consume out of material needs, they are actually more seeking spiritual satisfaction. For Gen Z, whether a brand is imported or not is not a prerequisite, but more important is whether the brand can empower opinions and emotional expression.
Bananain inside
Here in Gen Z, clothing has transformed from a functional product to a social tool for self-expression. Zhenge Investment Director Kuang Wei once said, "Clothing brands are not winner-take-all businesses, but the brand premium comes from the user's sense of identity, otherwise everyone earns only the difference in the supply chain." Therefore, for emerging brands, the value proposition has become one of the barriers to their core competitiveness, and only by allowing consumers to have a strong sense of identity and belonging can it be easier to make repurchase behavior occur, so as to maintain the long-term production and development of the brand."
It is foreseeable that as long as a new generation of consumers are still keen to express themselves and their beliefs with the help of fashion clothing, then capital's interest in the fashion industry will not fade. But for emerging brands, whether they can finally win the favor of Gen Z investors depends more on how they choose their value positions. WWD
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