Fashion-tech startup Otrium announces it has raised €24 million in a Series B funding round. The round is led by global fund Eight Roads, early investor in e-commerce mogul Alibaba. How did two young guys from Amsterdam convince this renowned investor to back them with such an amount? We spoke with Otrium co-founder Milan Daniëls to find out.
Series B investment for Otrium
Fashion has fallen on hard times. Many brands are scrambling to adapt to an increasingly digital target audience. And then a global pandemic hit as well, leaving stores empty and warehouses full. In this disrupted market, Otrium seems to offer a solution that makes them thrive. Founded in Amsterdam by two young entrepreneurs, it has now closed another impressive funding round, making them ready to take on the world.
Otrium is an online fashion-outlet, founded in 2016 by Milan Daniëls and Max Klijnstra. They created a platform where brands have an opportunity to connect with fashionlovers to sell last seasons’ collections. The goal is to extend the life cycle of fashion, by preventing large quantities of perfectly fine, unsold clothing from gathering dust in warehouses. Fashionlovers can sign up for Otrium and bag some bargains, while fashion brands not only have the opportunity to sell their previous collection but also gather insights about their audience.
200 brands, a million users
Otrium, meanwhile, takes care of everything: from online sales, storing and shipping. They currently have partnerships with over 200 brands. Among them are big names as well as up and coming or local fashion designers. Currently, the platform has over a million members, ready to scoop up some of the not-so latest fashion, up from 600.000 just a year ago. A rapidly growing user base that clearly hasn’t gone unnoticed as the latest investment shows. The latest round brings the total of investments up to roughly €33 million. This series B is led by Eight Roads, the globally operating fund known for early investments in Alibaba, Made.com and Treatwell.
“We first spoke with Eight Roads about one and a half years ago, after they approached us,” says Daniëls. “Some companies just get approached by these kinds of funds. It was a very informal meeting, there was no mention of funding yet.” Eight Roads is a later stage fund, explains Daniëls. And with Otrium not yet having closed their Series A-round, the time wasn’t right for them yet. “But that’s what they do. They plant seeds.”
Easily duplicate the model in other countries
Just over a year ago, Otrium raised €7 million in funding from London-based Index Ventures, which previously invested in companies as Farfetch, Asos, Adyen and Net-a-Porter. Daniëls: “After this round we had a clear goal to mature our technology foundation. We also wanted to show that our model could easily be duplicated in other countries, once we had the right blueprint ready.” That blueprint formed the base for their rapid expansion. In less than a year Otrium rolled out in Germany and France. “We are about to open in the United Kingdom,” says Daniëls. “We’ve pinned down the model to roll out pretty rapidly now.”
For Daniëls, partnering up with Eight Roads was not just about the money, but also about big ambitions. “They have a lot of experience with calling up consumer brands, both internationally and intercontinentally. They have a strong presence in London, which is helpful for our near future. But they also have a strong base in the USA and Asia. We wanted to connect with partners that can help us during our entire journey.” To make sure this happens, Davor Hebel, general partner at Eight Roads and Danny Rimer, general partner at Index Ventures, have joined Otrium’s board of directors to bring more experience to the company, says Daniëls.
Otrium and COVID-19
The funding comes at an interesting time for Otrium. The spread of COVID-19 has thrown a big wrench in the fashion machinery. “Brands are having a tough time now”, says Daniëls, referring to the world during the pandemic. The lack of sales from retailers has left fashion brands with an enormous surplus on inventory. At the same time, these companies are forced into a new way of working, so they have to speed up their digital transformation and facilitate the rise in online shopping. “That’s where we play a role. We want to help our current partners to sell this inventory. Since the outbreak of the virus, we’ve also changed our payment policy towards our partners. After a sale, we directly transfer the money to them. To keep a healthy cash flow is incredibly important for them during these times.”
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No matter how tough the times for the traditional fashion industry are, Otrium is doing well for itself. Daniëls calls their planned growth ‘ambitious’. But the past couple of months, they’ve seen business accelerate beyond those ambitious goals. But even a company that is well positioned to thrive during these unprecedented times has its challenges says Daniëls. “We had to rapidly scale up our distribution. At the same time we had to make sure our order pickers in the warehouses could work safely and in compliance with the guidance of the National Institute for Public Health.”
“It is important to help brands through the crisis. Because the physical retail is currently knocked out, we can offer them a digital solution.” To do so, Otrium needs to surround itself with like-minded people. Which brings Daniëls back to Eight Roads. “You’re looking for a club that ‘really gets’ what you’re trying to build. That is as enthusiastic about it as you are. International expansion is not for free. We are a tech-fashion company that wants to continue growing on both the B2B and B2B side. This funding gives us a new horizon. With this €24 million and before that our Series A, we are going to last for a very long time.”