Late last week, Editorialist—an eight-month-old online magazine with a focus on luxury accessories—raised $2 million in funding from a group of undisclosed private investors. And just a couple of days before that, Refinery29 raised a whopping $20 million. A few weeks before that, Into the Gloss, Emily Weiss' fast-growing beauty site, raised $2 million.
And there's more. The Coveteur--a site that began as a platform for celebrities and fashion insiders to show off their designer label-filled closets, but has recently begun expanding to more varied content--raised $500,000 earlier this year. Stylecaster, a small media company which houses a stable of sites including Stylecaster News, Beauty High, The Vivant, and Daily Makeover, has raised about $5 million over the past couple of years.
It's not news that fashion tech startups are raising money these days. However, those startups have traditionally been part of the e-commerce space. First, it was flash sale sites like Gilt Groupe (which has raised over $200 million to date) and Ideeli ($128 million). Next it was social curation sites like Fancy and Lyst, which are tied to e-commerce.
What Editorialist, Refinery29 and Into the Gloss have in common is that they're all content-based sites, which use articles, interviews, videos and/or editorials to draw readers in. Out of those content sites, Editorialist has the most significant e-commerce component (you can shop accessories used in editorials directly from the site). But all of them seem to be banking on content. It's an interesting bet, given that publishers still haven't figured out a way to make web as profitable as magazines—advertising on the internet is simply cheaper, which means yearly revenues are lower.
The consensus seems to be that there's significant value in having a distinct voice that readers latch onto--something that can only really be established through content. "There is a lot of noise in the market and in the digital sphere. If you can cultivate an authoritative voice that your reader trusts, editorial content can be a compelling tool in adding a higher level of service to your customer," Editorialist's Kate Davidson Hudson told us. "By understanding the story behind a piece and being able to contextualize its importance with the scope of the season, along with imparting editorial cues on how to wear it, or, insights into how other influencers are wearing or styling their looks, you're creating a rich, highly-serviced experience for your customer. It's a value proposition that's hard to compete with on any traditional retail front or print media front."
“Refinery29 is 100% focused on engaging our audience in a very meaningful way,” said Philippe von Borries, co-founder and co-CEO, Refinery29. A press release for their most recent investment round pointed to its core audience of Millennial women as being of value to marketers--an audience that Refinery has garnered by churning out tons of content relevant to them. They've also been experimenting with e-commerce, a more direct form of revenue generation, for the past few years, but have actually said that going forward they plan to scale back on selling directly to consumers and instead focus on third-party e-commerce, meaning allowing readers to discover items through their content, and click to buy through affiliate linking.
And it's likely that connection to Millennials that is attracting investors. "Investors are interested in these types of media properties for the direct and indirect revenue streams they hold with Millennial consumers," explained Macala Wright, writer/strategist and founder of Why This Way. "Millennials have become the most powerful, brand savvy consumer group globally." And sites like Refinery and Into the Gloss have successfully tapped into the way they want to consume media. "The hyper connected, collaborative consumers are not consumers of traditional media," Wright continued. "They're no longer reading traditional women's magazines like Cosmo or watching live television. Millennials don't want hyped fantasy. The want what's real and they want facts to back it up; they also want practical, actionable advice [that's] easily consumable."
Digestibility was something the Editorialist founders hoped would appeal to investors when they started the site. "We see Editorialist as a more efficient model in consuming our fashion media and in how women shop," explained Davidson Hudson. "For us, it's the forward evolution of fashion media and commerce."
Dan Marriott, managing partner of Stripes Group, who led Refinery's $20 million funding round and will join its board, reiterated the site's connection to Millennials, saying, “Refinery29 is built for this generation...The site’s audience craves and connects with its content in a way that’s most meaningful for brands, leading users from an editorial experience to a shoppable one."
So how does that translate into money for investors?
"When you look at their consumer purchasing power combined with marketing to them in traditional and non-traditional ways (live events, curated shopping guides, designer collabs, etc), there are many way to overlay ad revenue opportunities in terms of digital ad buys, licensing partnerships and even percentages of revenue sold if they get the formula right," Wright said. Meaning content sites will have to get creative in the ways in which they administer sponsored content and advertising, or sell inventory, in the case of Editorialist.
Another advantage likely attractive to investors is the sites' relatively low overhead. Content is created and readers are engaged at little cost to entrepreneurs, meaning they have a lot of freedom to start small and listen to their audience, tailoring content to what the audience wants. "Because of this new way of starting and doing business, investors are looking for a strong, dedicated founding team that is capable of attracting and growing an audience and (at least one day) making money," explained Eli Bozeman, co-founder of digital strategy agency Occom Group. "Investors interested in fashion startups are particularly drawn to the large, targeted audiences and interactive communities that many of these sites have been able to build, sometimes with sometimes just one or two founders." An example is Editorialist, whose two founders were quickly able cultivate a loyal readership and present the proof need to sway investors. "We've cultivated a very strong and loyal domestic readership," said Davidson Hudson. "We're also realizing very strong sell-through's and an extremely high user engagement in the way of time spent consuming the content on our site, which is proof that our model is working."
Refinery29 is also likely a model to investors: A successful example of a content site that started small and became huge and profitable. Not that sites like Editorialist and Into the Gloss set out to become it, but it was inevitable that investors would be on the hunt to get in on the next Refinery.
So what will come of these sites now that they have millions of dollars to burn?
"We are looking forward to scaling its mobile and shopping platform, and continuing to build out its unique content lab to offer millennial women exactly what they’re looking for,” added Marriott. They also plan to add more video and expand more into non-fashion-related categories including beauty, health/wellness, entertainment, and home. They also plan to invest much of into technology to ramp up mobile and shopping capabilities
Davidson Hudson said their money raised would go towards expanding internationally and "making meaningful investments in regions that have demonstrated a high-traffic rate, and demand for Editorialist content and commerce."
At the time that their investment round was announced, Into the Gloss's Emily Weiss said their money would go towards expanding her staff. She also told TechCrunch that she sees the site as a "multi-dimensional brand."