In the last three months, Japanese investment giant SoftBank has poured hundreds of millions of dollars into fashion companies like Vuori, Vestiaire Collective, LTK and Zepeto.
The investments are united by two threads, according to Lydia Jett, managing partner at SoftBank Investment Advisers: For one, they’re all companies at the forefront of their categories. Vestiare Collective, valued at $1.7 billion, is one of the biggest resale companies in the world. and Zepeto, with 2 million active users just three years post-launch, is a rapidly growing metaverse fashion company. Plus, they all have a “significant tech advantage,” Jett said.
The SoftBank Investment Advisers, which is behind all the listed investments, is the largest technology venture capital fund in the world, according to the Wall Street Journal. Jett said it’s no coincidence that apparel brands and companies have been common SoftBank investments over the last year. Fashion is undergoing a lot of changes, and the Vision Fund’s investments are based on the next directions of its focus industries. E-commerce, resale, the metaverse and the creator economy are set to be the biggest growth categories for fashion moving forward, Jett said. SoftBank also invests in consumer categories like food, transportation and energy.
Jett said, in many cases, the companies SoftBank is investing in are already well-established.
“We aren’t early-stage investors,” Jett said. “We don’t place a multitude of bets to try and catch a theme. We back companies that have already established themselves in the areas we’re interested in. But we do have to believe that there are tailwinds behind the sector as well.”
For example, rather than invest small or medium amounts in a variety of resale platforms, Jett said SoftBank preferred to find the right player in that space and put a significant chunk of money into that. That resulted in a $400 million investment round in Vestiaire Collective in September. Shortly after, a $400 million round for DTC athletic brand Vuori in October signaled SoftBank’s desire to invest in a promising DTC e-commerce brand.
Jett said Vuori and shopping discovery app LTK, the latter of which got a $300 million investment from SoftBank in November, impressed with their agility during the pandemic.
“The industry was really shaken up at the beginning of the pandemic,” Jett said. “There were companies that found their footing much more quickly than others. And the tech tools available through places like Shopify or LTK have become really important for DTC brands to scale.”
The metaverse company Zepeto got the smallest investment of the bunch at $150 million, at the end of November. Jett said she sees a lot of promise in the metaverse, though it’s still early days. She said she imagines the metaverse will help cut down on wasted production by letting brands test out ideas and aesthetics digitally before expanding them to IRL production if proven successful.
Jett said her unique position at SoftBank has given her a bird’s-eye view of what’s coming down the pipe for fashion around the world.
“I’m a globalist,” she said. “I have an advantage of being part of this global group. We’re based in Tokyo, but we have operations in Europe, the U.S., Indonesia, China, Korea — all these different places. I can see where the future will be in certain categories. Oftentimes, the U.S. can be behind the rest of the world, from a penetration standpoint. And some of these things — like digital payments, blockchain, digital fashion — it’s early innings for a lot of them in the U.S., but they’ll grow over time.”