From computers to couture: Jose Neves on raising $23m in business funding

Serial fashion entrepreneur Jose Neves explains how he secured a total $23m investment over 15 months to create one of the fastest growing online market places for independant retailers. 

José Neves started his first business whilst studying economics at university. An early interest in computer programming, he founded software company Grey Matter and began building his first business, not knowing this would later incorporate his second interest: fashion. 

Fashion empire
Heavily influenced by the booming shoe and textile scene near his home in Portugal, Neves began designing shoes. His designs proved popular and in 1996 he launched shoe brand Swear in London, his second venture. 

Fast becoming a serial entrepreneur, Neves added to his existing businesses in 2001 with the opening of London fashion retailer B Store, a luxury clothing retalier that later received a British Fashion Award in 2006. In addition to Swear and B Store, Neves added a number of footwear licenses, which all combined to create Six, a footwear company. 

After 10 years working in and observing the fashion industry, and as an independent boutique owner himself, Neves saw the financial challenges small firms face when trying to take their retail business online. Combining his technological skills and his love for fashion, Neves saw his chance to seize the gap in the market.

"It was quite obvious to me in 2006/7 that the trend in consumer behaviour was changing dramatically towards online and that it was becoming almost impossible for independent retailers to have their online channels," he says.

"On the other hand, these retailers had absolutely everything in terms of product, vision and supply that was relevant for a global audience of fashion consumers. If we could provide them with a platform which would be world class in terms of man power and technology, they would have the product that appealed to a global audience.

"It was a win-win for both the shops and the final consumers," he says.

Farfetch.com
In October 2008, Neves gathered together enough of his own funding and dedicated his existing software company to launch Farfetch.com, an online market place for independent high-end fashion brands. Providing one online platform would allow small retailers to overcome the barreirs of funding, human resources and infrastructure to profitably market their company and compete with larger retailers, he explains. 

Initially opened to European boutiques, Neves expanded the company to North American boutiques in 2009 and began receiving a number of investment offers from across Europe. In July 2010, the fashion entrepreneur signed a $4.5m investment deal with Advent Ventures, which was used by the company to expand its operations in existing countries, as well as emerging into Brazil.

"Advent Ventures understood the space both in terms of technology and venture capital space, as well as the fashion industry. It’s difficult to find that combination," he explains. 

Following the investment, the company grew rapidly and in January 2012 Farfetch.com reported an annual sales growth rate of 204%. In the same month, the fashion entrepreneur also announced a further $18m investment injection from Index Ventures, eVenture Capital and existing investors Advent Venture.

"There's a lot of innovation developing the sector and investors are scouting for companies that are making a difference and making small ownership scalable. When Index ventures approached us we thought it was an amazing world-class company that we wanted to partner with," he says. 

Neves explains that the new investment intends to help Farfetch.com overcome the biggest challenges it faces - strengthening the team and the brand. "Building the brand through gaining the respect of the consumer and the industry is a process that takes years. The other biggest challenge to us if building the team."

The 2012 investment is also intended to expand the company’s presence in Brazil, where it has 60 boutique partners. He says: "The business is growing extremely fast so it's time to gear up and beef up our online marketing, technology and business development teams."

To date, Farfetch.com has received a total of $23m investment and reported an annualised sales run rate of $61m, with the company expected to generate over $100m in 2012. The company continues to grow and employs 150 people across its four offices in Europe, the US and Brazil.

Social media
Surprisingly, for a site built on a community business model and founded by a computer programmer, Neves says that Farfetch.com has made little use of social media. "Social media has not been a priority for us so far," he says.

"We have concentrated in developing our platforms which handle a very different business model from traditional retail. We synchronise the stock of hundreds of points of sale run by independent companies so we continue to improve on a technology and service level."

He explains: "In terms of our online marketing channels we have concentrated on the ones that yield to most companies. Social media so far, gives around 5 or 6% sales to high end fashion retailers and there's a lot of low-hanging on fruit.

"This year in 2012 we'll invest in social media but we need to walk before we can run," he adds.