Millennial Men’s Fashion Retailer Frank And Oak Raises $15 Million – Forbes
Frank & Oak cofounder and CEO Ethan Song would be the first to admit he doesn’t have much experience in fashion. A former Deloitte employee who studied theater and computer engineering in school, the 30-year-old head of the men’s online fashion company says that most of his commerce experience came from short stints consulting with big box retailers.
Yet, a little more than two years after cofounding Frank & Oak, Song will be giving presentations at this month’s New York Fashion Week and taking his company into its next stage of growth after closing a new round of funding. On Thursday, the Montreal-based web retailer, which sells apparel targeted at millennial men, announced that it had raised $15 million in a round led by Goodwater Capital.
Since Feb. 2012, Song and fellow cofounder and COO Hicham Ratnani have built an upstart lifestyle brand that has attracted 1.5 million active users by offering in-house designed clothing collections online to men between ages 20 and 35. Customers sign up for the site, adding style preferences and sizes, and are emailed customized newsletters every month detailing the newest items. For Song, that is the key: delivering curated approach to online shopping that makes users feel as if they’re being personally advised in the fashion process.
“Our vision is not only to be a purveyor of goods or products, but to be your lifestyle guide,” says Song. “We want to take on the role as a lifestyle advisor for the customer.”
On Frank & Oak, new collections are debuted at the beginning of each month and last for about two months before being replaced by new items. No items are ever repeated and quantity is always limited, bringing in a “scarcity element” that encourages constant engagement from shoppers, says Song.
Mobile is a adding to that engagement with about a quarter million total downloads of the company’s Android and iOS applications. While the company did not disclose revenue numbers, its CEO did say that Frank & Oak sold 700,000 items in 2013. The average consumer shops about four times a year on the site, purchasing an average of two to three items in completed transactions.
Though the company is based in Montreal, 70% of purchases come from the United States. Song says that distance is not a problem, pointing to the city’s background of fostering fashion and e-commerce companies from Aldo Shoes to retail software firm LightSpeed.
“Silicon Valley can happen anywhere,” he says. “There are plenty of big fashion-oriented startups here.”
While there’s no shortage of fashion startups aimed at men–from upscale e-tailer Everlane to subscription services like Manpacks and Trunk Club (acquired by Nordstrom Nordstrom for $350 million last month)–Song says that few actively target Frank & Oak’s core audience of men between 28 and 32. He pointed to traditional offline retailers like Urban Outfitters, Gap Gap and J.Crew as his company’s main source of competition.
Thus far, the company has been able to survive in the cutthroat world of retail on only $5 million of previous funding, something that attracted Goodwater Capital partner Chi-Hua Chien. Chien, who cofounded early stage investor Goodwater after dialing back his role at venture firm Kleiner Perkins Caufield & Byers, says he was particularly impressed with the founders’ technical backgrounds in computer engineering and the company’s focus on mobile.
“We love commerce, especially new forms of e-commerce which are mobile first,” he says. “Mobile is making market places increasingly more liquid and efficient.”
The $15 million round, which was closed at the end of July and included other investors like Greenoaks Capital and Lululemon CFO John Currie, will help the 110-employee company bolster operations and develop its office in New York. As part of Goodwater’s investment, Chien has also taken a board seat, hoping that he can help guide the company in attacking what he sees as 10-figure market in millennial men’s fashion. He takes comfort in the fact that Song and Ratnani are part of that group.
“The two founders very much reflect their target customer,” says Chien, whose investment in Frank & Oak is his firm’s largest to date. “They are the bullseye of the customer group and they are building the products for themselves.”
Following the round, Frank & Oak has raised a total of about $20 million. Past investors include Rho Canada Ventures, Real Ventures and Eric Lefkofsky and Brad Keywell’s Lightbank.