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Emerging Labels See Opportunity in Partnering With Factories

Instead of teaming up with a more traditional investor or taking out a loan, some startup fashion brands are choosing to give their factory owners a stake in the business.

Designer Sofia Sizzi launched her New York-based label, Giulietta, after a decade of working for other brands including Gucci, Donna Karan and Calvin Klein. At those big companies, she had access to resources most independent designers can't even imagine. The best manufacturers, exclusive fabrics developed just for the brand and maybe most important: access to those who could help her accomplish whatever it was that she needed to get done. Launching Giulietta meant saying goodbye to all of that. 

That was, until, she decided to partner with Cieffe Srl, one of the biggest and most important factories in Italy. Guilietta began working with Cieffe three years ago as a client. (Even though her production runs were much smaller than most of their other accounts, she managed to convince the firm take her on after she became a finalist in the 2012 CFDA/Vogue Fashion Fund.) Three years later, Cieffe became her investor as well, taking a minority stake in Guilietta. "You can grow your company in many different ways and you can find capital in many different ways, but I always thought that this was one of the smartest ways, because the value goes directly into your product," says Sizzi. "For pre-fall, I would have typically gone to a fabric mill and developed a couple of colors for the season and that would have been all that I could afford. Right now, I'm sitting in front of 15 swatches of knits, new technical fabrics and new applications that I have access to and I can try. That is something I had when I was working at the big corporations." Along with the ability to do more extensive development, Sizzi has also introduced shoes. Plus, she has the support of Cieffe's sales team, which will help further build her business in Europe and elsewhere abroad. 

Sizzi's arrangement with Cieffe isn't as unorthodox as one might think. For startup brands that don't have unlimited funds — or would rather not put faith in an outside investor — partnering with a factory seems like a sensible choice. About a year after launching Objects Without Meaning, Los Angeles-based designer Alexandra Michelle went into business with her manufacturer, whom she had met while designing for a major retailer. "I really didn't have any financial support at all, zero," she says. "It was a godsend." Michelle and her manufacturer are equal partners in the company. "It was important to me," she says of the arrangement. "We both put in the same amount of time and effort. No one is slacking off. I think it's easier and cleaner." Right now, Objects Without Meaning's design studio is based in a room right off of the factory floor in downtown L.A. While the setup isn't likely to last forever — the collection deserves a proper showroom for displaying the goods — it has allowed the designer to be a part of the entire production process. "It's been a perfect situation," she says. "Now I really have it down." 

Both Michelle and Sizzi are industry veterans, but arrangements like these can make sense for novice designers, too. Nicole Najafi worked in e-commerce at Balenciaga before launching her direct-to-consumer denim collection Industry Standard. From the beginning, the New York-based Najafi's biggest challenge was just getting a factory to produce her goods. "There were some doors slammed in my face," says the designer of her first few trips to the denim factories in L.A. "That's when I became interested in finding a production partner." She met Matt Berkson, who runs his firm Fashion Trade Company out of a denim factory in Vernon, California. Berkson is a minority investor, and coordinates all production for Industry Standard. One of Najafi's main goals when launching the brand was to keep the price point low but the quality as high as designer denim. Because Berkson is producing her jeans at cost in exchange for his stake in the company, she can charge $100 instead of $200. "He is one of the best people in L.A. to have behind my jeans," Najafi says. "We have a lot of trust in each other."

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A factory-brand partnership can solve a whole host of problems facing emerging labels, as it has for Giulietta, Objects Without Meaning and Industry. But as with any marriage, there are potential pitfalls. The designer must be 100 percent positive that the manufacturer can grow with the brand, and that it is truly the right fit. (Most labels switch factories at least once in their infancy.) And unlike a traditional investor, the opportunity for a clean break is even less likely. Buying an investor out is harder when you're still relying on that investor to manufacture your goods. Sizzi, for one, is confident that she made the right decision. (As are Michelle and Najafi.) "I'm extremely happy," she says. "It's brought Giulietta to a different level."