A 2013 study by McKinsey and the Altagamma Foundation studying consumer patterns indicates what we’ve mostly had a hunch about: luxury customers are digital-savvy. This applies to the Middle East too, a 2014 Ipsos and Google survey in Saudi Arabia indicates that 48% of luxury retail purchases are conducted online. Mobility and convenience is a strong factor in the luxury online market, and The Luxury Closet, an e-commerce marketplace for authentic high-end pre-owned items at discounted price, is banking on this trend.
Launched in 2011 with a capital of under AED150,000, The Luxury Closet has steadily gained financial support over the years. In April last year, it raised US$2.2million from Middle East Venture Partners (MEVP) as the seed stage investor along with Dubai Silicon Oasis Authority (DSOA), twofour54 and MENA Venture Investments (MVI), followed by raising $1 million from Wamda Capital in December.
Founder and CEO Kunal Kapoor, a former head of sales at Louis Vuitton, emphasizes on the company’s discipline to complying to budget timelines and financial strategy for its growth plans. This drove the fundraising round, essentially looking into local VCs to benefit from the proximity and local expertise. He indicates that during the search for capital, looking into their investing portfolio was essential in assessing which partnerships would be most beneficial.
“We also looked for VCs who would help us with strategic advice in all critical areas, such as product development and growth strategy, the kind of parties who could bring credibility to our business by backing us, and who could also introduce us to a network of players,” Kapoor says. With their partnership with Wamda Capital, Kapoor notes, “We are thinking big, and are determined to get every luxury consumer in the Middle East to visit The Luxury Closet and use our service.”
“The pitch process was thorough and lengthy; each round took four to nine months to finalized,” says Kapoor. “But that worked to our advantage: with each new negotiation, we gained more experience and insight into what investors looked for and the key metrics to set to measure our business growth and success.”
WHAT HAPPENS NEXT
According to Kapoor, the company us allotting its funds to execute a plan for the following priorities: enhance user experience and drive engagement, and increase market reach. “Our seed round helped us prove our model, and our series A funding helped us build our processes and introduce the technology that can scale it all up,” says Kapoor, adding that they’re now fundraising for their next round with a target to raise over $10 million to help the startup scale across Middle East and India, a market that Kapoor indicates is a current focus for luxury brands.
Source: Entrepreneur ME