Introduction
Geoffroy Germano is managing director of Studio Paillette, a clothes rental company that promises to revolutionise the concept of fast fashion. Geoffrey, alongside the founder, his daughter Léa Germano, raised €600,000 earlier this year, including €120,000 in an SPV on Roundtable.
Geoffroy spoke to Roundtable about why an SPV was the right vehicle for Studio Paillette, what it’s like to work alongside his daughter and why you have to enjoy the day-to-day struggles to be an entrepreneur.
Roundtable: It'd be great to hear about your background and how you ended up working in the fashion industry?
Geoffroy: The full story is that I spent 30 years in the food and spirits industries, mostly in marketing. I worked in several countries. By 2016 I wanted to be back in France and have a different life. I wanted to be an entrepreneur, working in an impact-driven and innovative company.
I started a business with an engineer in eco-friendly air conditioning systems. I did that for four years, and then quit due to personal reasons. I was giving advice to my daughter during this time. After a while, I jumped into her startup, Studio Paillette, because I thought it was great, and it had traction. It was already up and running when Léa hired me.
A Shift from Traditional to Sustainable Fashion
Roundtable: What excited you about the clothes rental business?
Geoffroy: It's a high-impact activity because it's ‘slow rental’. We don't provide rentals for a two-day period, it’s by the month. Léa’s ambition was to bring high fashion to more people, without them having to buy it. For several years she worked in big fashion houses like Marc Jacobs in New York and Balmain in Paris. She was horrified by the quantity of clothes that she was asked to design and produce that would never be sold, and just become ‘deadstock’.
On average, only 50% of clothes are sold at full price in store. The rest is sold via sales or outlets, or is destroyed or exported to far-away countries.
Our business model means we don't buy clothes. Brands give them to us in exchange for communicating with and recruiting new, younger, digital native customers, and encourage the circular economy. Usually, one piece of fashion is worn between five or ten times. At Studio Paillette we use it 60 to 70 times. Our usage is 10 times bigger than if the item was purchased in store. We care and repair. That's the impact of our company.
Customers on our website don't see sales tags, like ‘70% off’. If customers see an item that’s 70% off on a destocking website, who is going to pay full price for the piece next year? Nobody. It's a game that destroys value.
Working together with your daughter
Roundtable: What is it like working with your daughter, Léa Germano, and what do you bring to the team?
Geoffroy: It's a great experience to build the company together. We have a lot of confidence in each other and understand each other immediately.
Investors are more confident when they see a balance of experience in the team. There are eight or nine of us now and most are in their 20s. I bring my marketing experience, and I focus on that, as well as general administration, adverts, social media, and KPIs. Léa is a stylist, and she selects the brands and clothes.
The Strategy Behind a Successful Fundraising
Roundtable: Can you tell me about how you went about fundraising at the end of last year?
Geoffroy: My target was a minimum contribution of €25,000 from each angel. So that's what we did. But then it quickly transpired that a lot of Léa’s friends also wanted to invest smaller amounts.
We didn't want a lot of lines on our cap table. On Roundtable, it was really easy to create the Studio Paillette SPV and solve this problem. Every time a friend or family member wanted to invest a small amount in the company, we just sent them the link.
We raised €600,000 and €120,000 of that was from small investors and the Roundtable SPV.
I was also impressed that Roundtable would maintain the SPV for ten years. The alternative was to ask our lawyer to create and manage the SPV, which would cost around €2,000 a year.
Roundtable: How time-consuming is fundraising?
Geoffroy: Fundraising took us out of the business for 50% of our time. When we finished the round, we thought, okay, let's get back to developing the company.
When you start a company, you can easily work 24 hours a day, so any time saved can be well used. Outside of fundraising, I spend more time on marketing, looking for customers and actually doing business!
But the Roundtable SPV saved us a lot of time and didn’t charge high commission, like other established platforms.
Roundtable: Do you have to be selective about which investors you work with?
Geoffroy: I think you have to be, but it depends on the context and if you have a lot of potential investors. Very often, you take the money where you can. That was not really our case, however: we have nice investors who have worked in the fashion, retail and tech industries so we have good advisors and resources. I also find it more interesting to discuss business with someone who has an opinion, rather than someone who is just offering up cash.
I tried at the beginning to talk to the big business angel networks. I told them, we have this B2C business that is re-inventing how we consume fashion, founded by a fashionista stylist. But they just wanted to hear about B2B SaaS – nothing out of that box.
I then started thinking very carefully about the people I would call, due to their profile, because I was introduced to them or because I knew there would be some common ground to help us start the conversation.
Final Advice for Entrepreneurs
Roundtable: Do you have any advice on how to start a business? It's interesting to hear your perspective, as obviously you work with family.
Geoffroy: I'm not sure it's a good idea in general to start a business with family. Clearly, I’m an exception! But it’s key to spend time with the founding team, especially if there are several partners, and make sure you get along very well and don’t crumble under pressure. I tried to do this in my previous roles but at the end, under pressure, we finished with conflict.
Also, be prepared to work a lot and for not much reward, at least for a while. I’ve experienced life in a big corporation and life in a startup. I can tell you, the day-to-day is much more comfortable in a big corporation.
I often hear that it's ‘cool’ to be an entrepreneur, to have your own business and be your own boss. But it takes a while for that to pay off!
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