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Financing a Start-Up: Fledgling Designers Court Kin, Kindness

With a keen fashion sense and some business savvy, or a numbers-wise partner, ambitious young designers are attracting some financial backing.

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However, all that could be a step ahead for many designers just starting out.

Designer Mark Montano said fashion newcomers are increasingly taking their financing into their own hands, as he has. “The trend lately has been that young designers are realizing that opening a small boutique is probably the best way to get capital to finance their wholesale collection and also have an outlet to get rid of bounced goods and whatever return merchandise they have,” he said. A storefront also works in an advertising capacity.

“Most young designers don’t have a lot of money,” said Montano. “They don’t have two nickels to rub together. It’s like being an actor. You do it because you love it — a lot. It’s really hard sometimes to stay in business.”

Small specialty stores can also be a financing venue when the product fits the needs of the retailer. Karen Daskas and her sister, Cheryl, co-own Tender, a small upscale boutique in a northwestern suburb of Detroit. For them, doing their homework means searching for young designers, from the U.S. and Europe, who bring uniqueness to their store.

“It is the specialty stores in the U.S. that have built up the name behind a new collection,” said Karen Daskas. “We’re the ones doing the footwork and giving new people a chance. If a collection is in the department store, I usually won’t touch it because my customers want some kind of exclusivity.”

As for finding new designers, she said, “I’ve gone all over from fifth-floor walkups to walking down alleys just to look at new collections. It gives us a chance to give a new designer a start.”

Since start-up designers often are limited in both production scale and finances, many ask retailers for a deposit of between 30 and 50 percent of the purchase order up front. Tender introduces four new designers each season with up-front financing for each new talent anywhere from $3,000 to $15,000. “It can add up, and is risky for one small store, but it’s good for our shop to have something different and it helps the younger firms,” she said.
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