When trying to decide on the perfect venture capital partner for his web-only men’s apparel company, what persuaded Bonobos founder Andy Dunn to close the deal was, believe it or not, the color of Jeremy Liew’s pants.
That’s because in their first meeting together, Liew, managing director of Lightspeed Venture Partners, was wearing an original edition pair of Bonobos’s “pink party starters,” which are boot cut, light pink pants that Dunn says epitomizes his customer base of men who love clothes but hate shopping.
“That was the entrepreneur equivalent of Jerry’s Maguire’s ‘You had me at hello,’” Dunn told financing workshop attendees at Internet Retailer’s Conference & Exhibition 2011 this week, referencing the 1996 movie in which Tom Cruise plays a sports agent.
Finding a venture capital partner that understands your values, supports your vision for your company, and is passionate about your product is essential if the relationship is going to work, Dunn said. Lightspeed, along with Accel Partners, invested $18.5 million in Bonobos last December and also has financed membership-only flash sale site ShoeDazzle.com, and daily deal provider LivingSocial.
Liew told workshop attendees that he was on the lookout for retailers like Bonobos or flash sale and daily deal providers that are taking advantage of a new way that customers are shopping. “There is a new generation of e-commerce sites that is bringing the excitement of shopping to the web,” he said. “This generation of companies is dramatically changing the way we shop by making it fun.”
Liew said retailers that represent investment opportunities must have the following characteristics:
• A large potential market such as apparel or shoes.
• A compelling brand with loyal customers, but a business model that has low customer acquisition costs.
• Entrepreneurs who run their companies with vision and innovation.
Bonobos was founded in 2007 on the idea of selling a better fitting pair of pants for men who want to shop on the Internet. The retailer, headquartered in New York City, now offers a full line of men’s apparel and offers free shipping and returns. It has raised at least $26.25 million to date.