Madrona, a Seattle-based capital investment group, has helped raise $4 million in Series A financing for men’s clothing company Indochino, co-founded by Kyle Vucko of Victoria and backed by former Yahoo Inc. president Jeffrey Mallett.
Burda Digital Ventures also participated in the investment in the company, which Vucko and Heikal Gani started while they were studying business at UVic.
Based in Vancouver with operations in Shanghai, Indochino is an online-only enterprise in the mould of shoe retailer Zappos.com, offering high-quality, custom-made men’s suits at prices designed to compete with off-the-rack chain outlets like Moores. It has a global customer base of 17,000 and was one of Douglas magazine’s 10 to Watch startups in 2009.
“We want to bring high-quality custom apparel to the masses, enabling men to get fashionable, affordable, made-to-measure clothing, anywhere in the world, in under two weeks,” Vucko says in a news release. “To help achieve this vision, we are making significant investments in technology and customer experience across the company. We are excited to partner with Madrona Venture Group, who have backed innovative, customer-centric online retail brands like Amazon.com and Nordstrom.com, and who have expertise helping companies leverage technology to scale.”
Vucko was in Victoria on March 28 and told Douglas the partnership with Madrona will allow Indochino to take several important steps in the growth and evolution of the business. First will be the hiring of several new executives, including a chief financial officer who will undertake a full audit of the brand’s price points. In the competitive world of men’s formalwear, says Vucko, “your credibility is communicated through your price points,” so you don’t want your product to be priced too low.
Secondly, the investment will allow Indochino to step up its marketing efforts. “In our first year or so, we got by on $700,000, maybe $800,000 in funding, so we never spent much on marketing,” Vucko says. In Indochino’s business, he adds, “branding is really important. That relationship is ultimately what motivates sales.”
The capital infusion will also facilitate continuity in quality and customer service as the company scales up production in China. Indochino has rapidly gone from working with a handful of home-based tailors to taking over large chunks of floor space at manufacturing facilities, and Vucko says investment in the supply chain is crucial for coping with this growth so the company stays on track toward its ambitious goal of “reinventing the way men shop.”
If you stop and think about it, he explains, “the retail experience was designed for women. At department stores like the Bay Centre, you have to go up several levels through perfume, cosmetics, lingerie, etc., to get to the suits. That retail experience really hasn’t changed in 100 years.”
Founded in 2007, Indochino has expanded beyond its roots in men’s custom suits to offer a full line of men’s custom dress wear, including blazers, outerwear, dress shirts, slacks, and accessories. The company saw its revenue hit seven figures in 2009 and grew sales 245 per cent year-over-year in 2010 on less than $1 million in total invested capital.
Photo: Indochino co-founders Heikal Gani, left, and Kyle Vucko.