On Friday 24th September we were delighted to welcome Gary Clarke, Angel Investor to speak with UKBAA’s Roderick Beer as part of our Friday Focus feature. Advice from Gary on investing in the UK’s fashion sector features as part of the fashion module in the DCMS ‘Invest in Creative’ toolkit.
As part of the conversation, Gary talked through his journey to date as an Angel Investor – from being the first cheque in a business, to supporting the board right the way through, and beyond, a successful exit. With a background in finance, Gary also shared his story of how he got into investing in the fashion sector and the opportunities that have come from the drive for sustainable fashion. We’ve pulled out just some of the key points he touched upon below.
1. Pick-and-shovel businesses – when it comes to consumer-focused businesses, with a focus on those in the fashion space, Gary advised that those that are tech-enabled can offer great opportunities. He expanded on this point, mentioning that he looks for ‘enablers’ or ‘pick-and-shovel businesses’: those that are streamlining processes for others, whether in the form of a platform, tools for distribution or software for improving customer engagement
2. The fashion sector is not congested – whilst some investors might consider the fashion sector to be risky, Gary pointed to the fact that as it doesn’t yet have as much of a deep investment ecosystem system built around it, there’s less competition and more opportunity to ‘serendipitously’ meet exciting businesses
3. Don’t dilute the business at an early stage – he shared he’d not ever look to take anything more than 25% equity. Whilst he’s heavily involved with the businesses he invests in, providing support in whichever way he can, he believes that the onus to deliver and build a business – particularly in the first few pivotal years – should still very much be on the founder
4. Invest in founders who are deeply passionate about what they’re doing – find the founders that truly love the product and business they’re building, not those simply drawn to the idea of being an entrepreneur
5. Not just lip service – given the demand from consumers, sustainability has been wholeheartedly embraced by certain parts of the fashion industry. He referenced one of his investees Cubbitts, a luxury glasses brand, where refurbishing and recycling are the core of their ethos. He notes that a demand for sustainability is partly coming from the younger generation, who have it embedded as part of their mindset.
6. Investing in fashion vs other sectors: Over the years, Gary has invested in everything from deep tech to bio tech and more, but from an angel perspective, Gary feels fashion businesses are pretty easy to understand. You can pick up a physical, tangible product or you can trial a service since you are the target audience. As a consumer of fashion products, you can assess the businesses with a baseline understanding what works and what doesn’t. In other sectors however, you might not be the natural user of the product or service and therefore could encounter more barriers when assessing a deal. The sector enables you to understand the competitive landscape, conduct due diligence based on your experience, and as one that is naturally fast moving, it’s always transforming.