Co-founders Ethan Song and Hicham Ratnani seem to have found a winning business formula in their savvy online-only menswear brand Frank & Oak.
Launched in February 2012, the Montreal fashion start-up made the news this month when they announced they had raised a Series A investment of $5M. Lightbank, the investment vehicle from Groupon Inc. co-founders Eric Lefkosfsky and Brad Keywell, led the funding round, with participation from Bertelsmann Digital Media Investments, Rho Canada Ventures and Real Ventures.
Real Ventures had backed the two-man team’s earlier venture, Modasuite, in 2011, after it participated in the 2010 edition of the Défis des Anges Financiers. The Défi, a now-defunt Jeune chambre de commerce de Montréal (JCCM) initiative, linked the budding entrepreneurs to its investors.
In a 2011 interview with MacQuébec founder and entrepreneur Kim Auclair, Ratnani called the experience of participating in the Défis des Anges Financiers an enriching one, allowing them to solidify their model and vision throughout the process of financing, meetings and presentations.
Since then, Song and Ratnani moved their focus away from the custom-made shirts they offered with Modasuite.
Instead, Frank & Oak has quickly become known among style-conscious men for offering a monthly selection of classic items for under $50. In a move that likens it more to the magazine industry than to that of ready-to-wear fashion, it also curates the content for each individual that shops at the site. As a result, the site feels and reads more like a GQ or an Esquire article than a typical online shopping site like Beyond the Rack, also a homespun Montreal product.
The fact that the 28-person team designs all their products, manufactures them and sells them directly to clients lead to margins investors like, the Wall Street Journal pointed out in its post on the investment deal.
The men who shop on the site, meanwhile, like the under-$50 price tag – not to mention the online-only aspect which caters to their desire to avoid the Saturday trip to the mall at all costs.
In fact, the online-only approach for men’s clothing stands out, an option that has yet to be explored to its full potential by other retail sites.
Sales in menswear are what are driving growth in retail and will continue to do so in the foreseeable future, according to this Globe & Mail article on the company, which makes Frank & Oak a potentially very lucrative start-up.
To wit, Frank & Oak will be shipping over 12,000 orders this month, Song confirmed in the Wall Street Journal piece. They’re also acquiring 60,000 users a month. It had 165,000 when Song spoke to La Presse in October.
The team also plans to expand in the near future, with a four- to -five person New York office is in the works. That’s unsurprising given that 70 per cent of its sales come from stateside. All in all, it’s great to see that the Défis des Anges Financiers was able to help connect this Montreal success story with the investment it needed to grow.
Why do you (or, why don’t you) shop online? What factors play into your decision into whether or not to purchase on the World Wide Web?