LANSING — A New York-based venture capital firm wants to propel Michigan’s nascent fashion industry to runways everywhere.
While many venture capital funds choose to target popular sectors in the technology and health care industries, Project I Fund LP hopes to fill a niche for entrepreneurs trying to push their fashion products out to a larger market.
The $5 million venture capital fund recently opened a Michigan office through a strategic partnership with The Runway Fashion Incubator in Lansing. Project I will serve as the venture capital firm in residence at the incubator, which is administered through the City of Lansing and the Lansing Economic Area Partnership (LEAP).
“We want the Michigan fashion scene to be a national narrative,” said Jon Lewis, chairman of Project I. “It’s not just about the New York fashion scene or the L.A. fashion scene. Whether that’s even relevant anymore is almost a myth.”
To that end, an economic impact report last September from the congressional Joint Economic Committee showed the $380 billion fashion industry has started to become more distributed in recent years, with emerging clusters developing around areas with strong design schools.
“High-value jobs in the fashion industry that pay high wages are spreading throughout the country, meaning that the economic impact of the fashion industry is expanding beyond the industry’s traditional footprint,” according to the report.
PRIORITIZING TECH INTEGRATION
Lewis and business partner John Elmuccio, who serves as Project I’s CEO, believe products from small, local fashion entrepreneurs will grow in popularity in coming years as consumers eschew traditional retailers to focus more on direct interaction with brands.
“There’s obviously a shift in consumer buying patterns and that really allows for a different mindset and conversation about how brands can be relevant,” Lewis said. “When you look at Michigan, that raw authentic energy really comes through in a branding proposition.”
Project I primarily intends to target early-stage companies with a proof of concept. Specifically, Lewis and Elmuccio are looking for companies with innovative products and owners who “believe in the disruptor model.”
The firm plans to deploy between $250,000 and $1 million per investment and focus on companies with products that integrate some form of technology, Lewis said.
At the onset, Project I aims to invest in two Michigan companies, two companies in New York and one company from Los Angeles.
The firm is currently in the final stages of striking a deal to invest in Article One, a Flint-based eyewear company, and is in the beginning phases of several other deals, Lewis said.
By maintaining its office in New York City, Project I hopes to coach and mentor its companies — and other entrepreneurs passing through the incubator — on the intricacies of the fashion industry.
“A lot of the incubator candidates that come through here want to talk to someone who has a long history in the fashion business and wants to know how VC and investors work,” Lewis said. “We have those conversations with them, whether we invest in them or not.”
A NASCENT SECTOR
For LEAP, adding Project I to The Runway Fashion Incubator marks the next step in the economic development organization’s vision for building a fashion sector in mid-Michigan and throughout the state.
“We took a big risk a number of years ago to put together this fashion incubator in downtown Lansing,” said Bob Trezise, president and CEO of LEAP. “With the technological advances in stitch and sewing, it is possible to bring back the fashion industry, especially manufacturing, not only to the United States but right here in Michigan. Our fashion incubator is trying to create a connection between our design talent and actual production.”
According to Bureau of Labor Statistics data, more than 1.8 million people work in the fashion industry nationwide, but apparel manufacturing jobs have declined in recent decades. In 1990, almost 940,000 people worked in apparel manufacturing, compared to fewer than 138,000 in 2015.
However, the Joint Economic Committee report noted that U.S. apparel manufacturing has benefitted from new retail trends favoring “small-batch, fast-turnaround products to meet fast changing consumer tastes. U.S. production allows for a product to be conceived of and produced in weeks. This is particularly important to small companies addressing niche markets.”
Joe Carr, director of The Runway Fashion Incubator, believes having a venture capital firm embedded within the organization will help convince more people that fashion can be a high-growth industry and investment opportunity.
“It’s such an important key resource for fashion startups because in a lot of people’s eyes, they see fashion as being more artistic,” said Carr, who also serves as the startup innovation manager at LEAP. “They don’t see it as a high-growth opportunity or industry, except for a select few.”
Project I also serves as the venture capital firm in residence at the Flint Ferris Wheel Innovation Center, and has relationships with other funds and resources, including Grand Rapids-based Start Garden and Ponyride, an arts-focused incubator based in Detroit.
Economic developers also think having a fashion-focused venture capital resource in the state will further help retain graduating fashion designers from a variety of universities across the state.
For example, Kendall College of Art and Design offers a bachelor of fine arts degree in fashion studies through the Pamella Roland DeVos School of Fashion. The program includes a one-year immersion at the Fashion Institute of Technology in New York City.
According to Carr, The Runway Fashion Incubator wants to become a conduit for services that encourage designers to try their hand at the industry from Michigan.
“This (incubator) was an idea to create a kind of central focus point and resource center for these students and individuals who may have been in fashion in Michigan all along, to be able to come to the space, get an office, make their prototypes, use their production space, come to a fashion show, or just be involved in the fashion scene that’s grown here,” Carr said.
— MiBiz Editor Joe Boomgaard contributed to this report.