Daniel Gulati and Vivian Weng
Harvard Business School
Daniel Gulati and Vivian Weng committed to the idea of Fashionstake.com, a "crowdfunded" fashion website, on their third day at Harvard Business School last September. Shortly after they met, they realized that Gulati's experience in launching companies and Weng's history in public relations and production for fashion labels made a good match. So they created a business plan. "It wasn't easy to go to school full-time and start a business," Gulati says. "But it accelerated the process. We could test the idea with our professors and classmates."
From the start, Gulati and Weng met regularly with Tom Eisenmann, an entrepreneurship professor at HBS. He offered feedback on their idea for a website that invites budding designers to share their clothing lines and invite potential customers to invest.
Anyone can pledge $50 in a brand they like, and they're charged only if that brand raises $50,000 in pledges. If the target is hit, the line goes into production, and six to eight weeks later the products are sold on the site. Investors make a return on their investment through clothing credit and exclusive buying opportunities. FashionStake earns revenue by taking a small percentage of the sales. "We're a partner [with] these designers," Gulati says. "If the collection doesn't sell well, we don't earn much either."
The two invested $5,000, which helped sign designers, develop the website, and gain initial customer feedback. A few months later they decided to raise outside capital and signed with Silicon Valley-based Battery Ventures. They also have angel investors from the fashion industry.
The site was launched on Sept. 1 with 20,000 members, eight employees, and four designers, with plans to add one designer every week. Gulati and Weng are in the process of rolling out a more interactive version of FashionStake, and they'll be able to take advantage of HBS's resources, since they don't graduate until May. -- Sommer Saadi, posted Oct. 18, 2010