01 October 2014

French clothing maker targeted by angels in September

So far in September there have been a total of 21 European angel investment deals with an aggregate value of EUR 23 million, according to Zephyr, the M&A database published by Bureau van Dijk. Volume-wise the situation looks promising as this brings the month close to the 24 transactions recorded in August with a week to go until the end of September at the time of writing. However, it is a different story by volume as the EUR 23 million notched up thus far remains some way off the EUR 43 million posted in August 2014 and if there is no further investment in September it will prove to be the lowest month in terms of deal value since December 2013, when just EUR 16 million was injected into European targets by angel investors. In spite of this, it only takes one particularly large deal to change the course of the results. So far, September 2014 does not compare well with any of the previous eight months in 2014 or the same period last year. In September 2013 there were 32 European angel investments worth a combined EUR 44 million. At present neither volume nor value looks likely to replicate such results and if both remain at current levels, it would represent the fourth consecutive monthly decrease in volume.

Given the aforementioned results it comes as no surprise to find that individual deal values have proven to be relatively modest in the month to date. Even September’s largest European angel investment, a funding round by UK-based online big data platform operator Import.io, was worth just under EUR 4 million, a fairly paltry amount when compared to some of the deals announced in 2014 to date. The year’s largest European angel investment so far is worth almost EUR 48 million and took the form of a series D round by online clothing retailer FarFetch UK, which secured the injection from Vitruvian Partners, Condé Nast Publications, Advent Venture Partners and Richard Chen. Meanwhile in September there were a number of other transactions valued at around a similar level to the Import.io deal, including rounds by MGB Biopharma, YesLab, Tink and Primo1D. Interestingly, the month’s three largest European angel investments all involved UK targets. Others include Sweden, Belgium, Spain and France.

Indeed, the latter country was targeted in a deal which stood out among the usual software transactions so beloved of angel investors. Men’s clothing, while not an area traditionally targeted regularly by business angels, has still received a few injections in recent years and this month Paris-headquartered ChicTypes was the latest to get funding. The start-up secured EUR 1.40 million from Kernel Investissements, Pierre Cacgni and other undisclosed business angels in order to accelerate its growth and expansion. This represents ChicTypes’s second round of investment as it first secured an undisclosed amount in April of last year. The firm intends to utilise the proceeds to make its site more user-friendly, thereby improving customers’ overall experience. It also hopes to launch a mobile application and create a showroom to which it can welcome clients. ChicTypes was established in 2013 by Antoine Régis et Etienne Morin who decided to create a solution for modern men who have neither the time nor inclination to spend significant amounts of time shopping yet still recognise the importance of being well-dressed. Essentially users can order the clothing and outfits of their choice, which are then delivered to their homes to be tried on. Customers can then return unwanted items, paying only for those they choose to keep.

As mentioned previously, although the clothing sector is not commonly targeted by angel investors, there have been a few cases where they have bought into such companies in recent years. In fact, there have been 10 such deals worldwide since the beginning of 2006. Of these transactions, the largest by far involved a US target as Michael Kors (USA) received around EUR 351 million from Tommy Hilfiger, Ontario Teachers' Pension Plan and sovereign wealth funds in July 2011, to be used to finance its international growth. Second place was also taken by a US company, albeit in a much more recent deal with a significantly lower consideration. In April of this year San Francisco-based shorts maker Three Guys Holding Company received just under EUR 3 million from a range of investors including Burch Creative Capital, Rothenberg Ventures and IDG Ventures Management Company, as well as Ben Lerer, Blair Lambert, Brian Spaly and Bob Hall. The ChicTypes deal represents the largest European angel investment since the start of 2006, but a number of other companies on the continent have also been targeted, including Lithuania-based sportswear maker Tuta, French luxury swimwear company Robinson Les Bains and UK-headquartered technical outdoor clothing manufacturer Jöttnar.

To sum up, September appears unlikely to reach the same heights as recent months in terms of value, but may still edge closer to August’s volume level in the remaining days of the month. It can be seen that the lack of a big-ticket deal, combined with fairly average volume, has kept values down. The summer period, which usually proves to be reasonably quiet as far as European deal activity is concerned, has now come to an end and it will be interesting to see whether or not the situation picks up in the run-up to Christmas.

© Zephyr