this is 'part one' of an interesting article posted on wwd earlier this week
Dirk Schonberger
Haider Ackermann
more to come
credited to wwd.com

Dirk Schonberger

Haider Ackermann
PARIS — Can investing in a fledgling fashion house reap profits?
A growing number of European investors think so, and they are starting to pump capital into young fashion brands. In France, investment bank Natexis Capital has created a fund called Mode et Finance to invest in young designers, while in Belgium, investor Anne Chapelle has purchased shareholdings in the young businesses of Haider Ackermann and Dirk Schonberger. She also holds a stake in Ann Demeulemeester's company.
Meanwhile, in the U.K., Imran Amed, a former consultant at McKinsey & Co., has assembled the first round of financing for a fund called Byesse that will buy into young fashion firms; the first investment is expected to be made later this year.
Giles Deacon, Anne-Valerie Hash, Christian Wijnants and Charles Anastase are among the young designers some think may attract this new group of investors.
The development is propitious for struggling talents, as the market has been challenging for independent fashion houses in the face of giant and well-capitalized conglomerates like LVMH Moët Hennessy Louis Vuitton and PPR, parent of Gucci Group.
Ackermann is a case in point. Just a few years ago, he was on the verge of closing, despite industry kudos — unable to scrape up enough money to produce a collection.
"It was a horrible period," he recalled over coffee at the Café de Flore here. "I was working day and night. I was loading and unloading boxes. It seemed funny at first, but doing everything yourself got old very fast."
Then the designer's fortunes reversed. He participated in the Gwand fashion festival in Switzerland and took the first prize of 100,000 euros, or about $128,000. Then Chapelle bought into his company.
Now the designer is on track, having moved from Antwerp, Belgium, to Paris, where he has assembled a new studio and feels fresh creative energy. Chapelle is banking on his business moving into the black within a year.
"It all happened at a very critical moment," said Ackermann. "I could show again. Even more than the money, which I needed desperately, it gave me confidence again."
Chapelle's support has given Ackermann more breathing room and brighter prospects for future growth, he said. "When I started, I thought it was a luxury to be independent. Now I think it's a luxury to have a financier."
More and more young designers feel the same, which represents a big change in their mentality. The new attitude underscores how difficult it has become for them to survive. Even fashion graduates these days say they want to work for a big house, where they can expect a monthly paycheck, instead of schlepping it on their own with uncertain prospects for survival.
And while designers recognize the value of financing, investors see untapped opportunity in such creative voices and a potential niche for developing brands that stand out in a retail landscape that is becoming increasingly standardized. Generally, the investment strategy entails taking small shareholdings in a stable of young brands with the view that maybe one or two will make it. The strategy mirrors that of venture capitalists in the high-tech and pharmaceutical sectors, sprinkling seed money around to see what sprouts.
Investors dream of finding a jewel along the lines of Jimmy Choo, which Tamara Mellon — adding business acumen and marketing savvy — helped to build into a business with sales of almost $150 million within a decade. The company is now owned by the private equity firm Lion Capital, which bought it in November 2004.
But many investors are simply besotted by fashion and love nurturing creative types. They know that elevating a budding name takes patience, and that fashion offers few quick returns.
"First you have to be willing to invest, and then you have to work with the designer to get [the formula] right," said Chapelle. "With a young designer, it takes at least three seasons before you can reach breakeven."
Amed said many fashion start-ups lack the business expertise needed to succeed in today's highly competitive landscape. "Throwing money at young designers isn't enough," he argued. "You need a business partner."
He pointed to successful fashion-business tandems Tom Ford and Domenico De Sole, Yves Saint Laurent and Pierre Bergé, and Miuccia Prada and Patrizio Bertelli.
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more to come
credited to wwd.com