Questions to ask before investing in talent
July 11, 2011 7:59 PM Subscribe
What questions should I ask a very promising Fashion college student who needs seed money for a business?
A friend of mine met a 21-year old college student who is attending fashion school. After looking at her portfolio, visiting her studio, and being impressed by the research done, said friend was very interested in the accessories and apparel prototypes created by College Student. Investing capital into her talent came up.
My friend and I are in our mid-30s. We are not friends with College Student. We are prepared to invest $10K combined. We requested that she send us a business plan in writing. We will have a meeting with her in the future. How do I increase my knowledge on how much potential this business has? What type of questions should I ask College Student so I know I won't be taken for a ride?
A friend of mine met a 21-year old college student who is attending fashion school. After looking at her portfolio, visiting her studio, and being impressed by the research done, said friend was very interested in the accessories and apparel prototypes created by College Student. Investing capital into her talent came up.
My friend and I are in our mid-30s. We are not friends with College Student. We are prepared to invest $10K combined. We requested that she send us a business plan in writing. We will have a meeting with her in the future. How do I increase my knowledge on how much potential this business has? What type of questions should I ask College Student so I know I won't be taken for a ride?
If the $10K is any kind of *investment*, that's expected to generate profits - I can tell you right now, save your money. It takes far, far, far more than $10K. And first of all, you need more than a 21-year old college student attending fashion school. The only people who make money at that end, and who don't already have a few years experience running their own business, are people who come at it from the sponsorship end - such as skateboarding, surfing, biking, sports and young people niche markets, and for that, the young person needs to be someone who is immersed in that world, whatever that sport/leisure activity may be... frequently they hook up with a celebrity of that world (some kind of world or national champion etc.), or a music genre celeb with a clothing line (like with hip-hop etc.).
The other niche market is "street fashion" - again, usually it's someone with some kind of cred, or some kind of skill (like graphics - f.ex. Christian Audigier of ed hardy fame, yuk). This is your best bet for low money investment, though it will be a lot more than 10K, and will take a lot longer - plus the competition is absolutely fierce in this space - odds are higher buying a lottery ticket.
If it's not a niche market like that, just general fashion or haute couture, forget about it - no 21 year old is going to do a single thing in this market, period.
Before you go any further, take a look at this: Seamless. Available from Netflix streaming. Watch it, and pay special attention to how much money, time and connections it took these young people to even get to a position to compete, and how hard it was and how almost all of them failed. Watch it carefully, and then think about it.
posted by VikingSword at 9:32 PM on July 11, 2011 [1 favorite]
The other niche market is "street fashion" - again, usually it's someone with some kind of cred, or some kind of skill (like graphics - f.ex. Christian Audigier of ed hardy fame, yuk). This is your best bet for low money investment, though it will be a lot more than 10K, and will take a lot longer - plus the competition is absolutely fierce in this space - odds are higher buying a lottery ticket.
If it's not a niche market like that, just general fashion or haute couture, forget about it - no 21 year old is going to do a single thing in this market, period.
Before you go any further, take a look at this: Seamless. Available from Netflix streaming. Watch it, and pay special attention to how much money, time and connections it took these young people to even get to a position to compete, and how hard it was and how almost all of them failed. Watch it carefully, and then think about it.
posted by VikingSword at 9:32 PM on July 11, 2011 [1 favorite]
Response by poster: It is more internet meme and geek fashion. The majority consists of quality screenprinted t-shirts. I would like to gain income from this.
posted by ayc200 at 7:46 PM on July 12, 2011
posted by ayc200 at 7:46 PM on July 12, 2011
Making money in the t-shirt business, is first and foremost about the business end of it, not the design end of it. Assuming - and that's a big assumption - that your 21-year old is able to make great graphic designs that are also very commercial, this doesn't even begin to scratch the surface. It's all about how it's going to be marketed. That's 95% of it, as a business, is... business! Production. Marketing. Fulfillment. Accounting and business development. A one wo(man) shop or a two (wo)man shop might, conceivably launch for $10K, but it's all elbow grease - massive sweat equity (that's 95% right there), a very disciplined business approach, and a savvy niche marketing presence - the t-shirt business is insanely competitive. Obviously, starting with a big chunk of change can launch you faster, but at that point, you really must know exactly where you are going and have a very well-thought out business plan... something you only get from experience. But otherwise - it will take time, a lot of time and 7-day work weeks to start with nothing (which $10K really is), and make it a going concern. The upside is that with stakes that low, and plenty of time, you can afford to make mistakes. The downside, is it can take forever to make it a business - and then, you must have the skills to scale it up (which is not at all easy).
If you can afford to lose the $10K, it might be an interesting experience. But odds of success, are statistically speaking - very small.
If you do go ahead, carefully consider what you see your role as. Being a passive investor is the easiest of course - you just need a good contract with good enforcement provisions (because inevitably there will be disputes). But - I think it's virtually guaranteed to end in tears if all you want is to be a passive equity investor. It would be a pretty unusual 21-year old who has both the experience and savvy to run a business in as competitive space as t-shirt sales. That means you simply must become a business partner and take on a ton of responsibility of running this - which means your contracts and agreements are going to be a lot more complex, and of course it also means you must ask yourself if you want to do a ton of work for small odds of success (and success here means simply not losing you initial $10K stake within a few months) - and be prepared to face the need to keep adding capital (many times!).
posted by VikingSword at 10:39 PM on July 12, 2011
If you can afford to lose the $10K, it might be an interesting experience. But odds of success, are statistically speaking - very small.
If you do go ahead, carefully consider what you see your role as. Being a passive investor is the easiest of course - you just need a good contract with good enforcement provisions (because inevitably there will be disputes). But - I think it's virtually guaranteed to end in tears if all you want is to be a passive equity investor. It would be a pretty unusual 21-year old who has both the experience and savvy to run a business in as competitive space as t-shirt sales. That means you simply must become a business partner and take on a ton of responsibility of running this - which means your contracts and agreements are going to be a lot more complex, and of course it also means you must ask yourself if you want to do a ton of work for small odds of success (and success here means simply not losing you initial $10K stake within a few months) - and be prepared to face the need to keep adding capital (many times!).
posted by VikingSword at 10:39 PM on July 12, 2011
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posted by Ideefixe at 8:26 PM on July 11, 2011