Venture studios have been popping up in various industries—healthcare, insurance, professional services and otherwise. But serial entrepreneurs don’t seem to be rushing to the fashion industry to offer studio-based services.
That could be because the fashion industry has many nuances and requires deep, institutional connections for success, despite the lagging technology behind the industry being more than ripe for disruption.
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A venture studio aims to create and spin out startups—sometimes on behalf of a corporation, and other times for direct studio gain, with the intent of being acquired or becoming successful in the market. Venture studios have varying operating models, but some do veer into accelerator territory.
Beyond Form, a first-of-its-kind fashion tech venture studio based in Paris, began operating in 2020. The studio invites founders with an idea or early-stage business to apply to work with it. If accepted, the founders receive personalized attention from the studio’s staff, as well as access to connections in the fashion industry. The end goal is to move startups to a point where they’re viable for venture capital.
The studio also builds startups based on internal ideas, said Peter Jeun Ho Tsang, the studio’s founder and CEO.
According to a 2022 McKinsey & Co. report, fashion companies are expected to invest between 3 and 3.5 percent of their revenues in technology. That’s a promising development from 2021, when companies put just 1.6 and 1.8 percent, on average, into these investments.
Beyond Form brings in founders developing technology to transform fashion and apparel. Its portfolio features startups like FINDS, which helps brands manage excess inventory, T-Fashion, a platform that helps brands forecast trends and create designs with generative AI, and Sellery, an ethical fashion platform that grades the environmental and social impacts of the products it sells.
According to Tsang, Beyond Form gives founders access foundational knowledge and connections in the fashion industry, which sometimes yields customers for the budding startups.
Yiğit Elmas, co-founder of T-Fashion, said leveraging Tsang’s access to brands and fashion industry experts was a major selling point on joining the venture studio’s portfolio.
“Even though my family has a background in fashion, I actually had an AI major. So I’m an engineer, and my team [consists] of all engineers,” he said. “We lacked the fashion perspective that we needed to make T-Fashion successful.”
Elmas said he thinks he made the right choice in joining the Beyond Form cohort. It has yielded some fruitful introductions for him and his team.
“Peter and his team were able to… introduce us to some key people in the industry. We started meeting with Gucci, for example, and we got some good insights from them. They’ve been introducing us to different customers at different levels, which helped us gather real feedback from the market, which really helped us to direct the product.”
T-Fashion has a partnership with International Fashion Academy Paris, where Tsang previously served as director of the Foundry Powered by IFA Paris, which offers an incubator for fashion startups.
And Elmas and his co-founders aren’t unique in the fact that they come from outside of the industry. Tsang said about 75 percent of the founders Beyond Form works with had no prior experience in fashion.
Andrea Herget, the co-founder and chief operating officer of FINDS, said the startup, which is raising its seed round, has benefitted from Beyond Form’s depth of knowledge about the inner workings of the fashion business.
“You have this close relationship, and it’s very specialized and niche with fashion and tech, which brings the right contacts and also the common language of fashion,” Herget said. “Not everyone understands the business mechanisms and the culture of the [fashion] industry.”
FINDS was the first startup to sign a contract with Beyond Form in 2020, Herget said.
Elliott Parker, CEO of High Alpha Innovation, a venture studio which has successfully spun out a number of software startups with the likes of Koch Industries and the University of Wisconsin-Madison, said the Beyond Form model is not typical of venture studios he’s seen.
“A venture studio proactively generates ideas, creates new companies, invests in the companies, and helps them scale. An incubator is reactive, it helps founders who already have an early-stage business they are launching get support and services to advance their company to the next level, often in exchange for a small piece of equity in the company. Both are useful, but completely different in their business model and objectives,” he said.
Beyond Form falls into both of those categories, based on its offerings and business model.
Many venture studios partner with corporations or other partners to build ventures on their behalf, which often yields a direct payout for them, even if equity is not directly involved in the deal.
Beyond Form does not partner with corporates and is privately funded, Tsang told Sourcing Journal.
“We’re not held to somebody else on top of us telling us what to do,” Tsang said.
Parker said that while that’s a true benefit of working independently, studios that elect not to have corporate funding face a few key challenges.
“First, generation of ideas at a deep and knowledgeable level can be difficult without a close partnership with the corporations that understand their space deeply. Second, launching companies that have true advantages, like first customers, distribution, or credibility, can be difficult without corporate partners,” Parker explained.
In the case of a startup built by a studio without an affiliation, it’s most common for a studio to take equity in the startup—it’s how the studio earns a cut from what its staff has helped to build.
Tsang told Sourcing Journal that Beyond Form takes about 40 percent equity in the startups that come from internal ideas.
Parker said most venture studios take more than that, if their goal is to retain equity in startups—often between 20 and 70 percent, depending on the level of financial and human capital the studio contributes.
“Most studios think of themselves, rightly so, as co-founders and first investors in the ventures they create,” Parker said.
Tsang said that’s exactly how he and the Beyond Form team see their role with the startups they’ve worked with. And Herget said that the studio’s guidance over a long period of time has been paramount to growing FINDS, despite the fact that the startup was not an internal venture for Beyond Form.
“Beyond Form is more like an extension of our team, I would say. I have experience with other mentors… who you see a lot for a [short] period, and then it’s over,” Herget said. “But with Beyond Form, it’s the only relationship that’s really been long term.”
In addition to the three years FINDS has been associated with Beyond Form, Herget said she expects to continue the relationship for at least six to 12 more months.
For the startups it sources externally, Tsang said, Beyond Form takes between 5 and 10 percent equity. That’s more in line with what an incubator program might take, per Parker’s analysis differentiating an incubator and a studio.
Herget, Elmas and Jennifer Morgan, founder of Sellery, all said the equity they gave Beyond Form falls at the low end of that spectrum. That equity gave them access to entrepreneurial assistance from the studio.
Morgan said the studio has not made any direct financial investment in her startup, but that once-monthly meetings with the studio have helped her reconsider her business model and the types of partnerships and goals she may pursue going forward.
As of yet, Beyond Form, which has been working with startups since 2020, does not have any companies in its portfolio that have raised seed funding and moved toward raising Series A investments.
Tsang said he doesn’t yet know when the first business will spin out. According to the studio’s site, 11 of the 15 companies Beyond Form lists in its portfolio are “pre-seed.”