SUMMARY
The startups have reportedly initiated a process to return funds raised over the years to marquee investors like Accel and Prosus Ventures
Marketplace startup Fashinza is looking to pivot its business model to a “manufacturing startup”
Virgio pivoted its business model from fast fashion to sustainable fashion last year in October
After failing to sustain a healthy business model, fashion startups Virgio and Fashinza have initiated a process to return most of the proceeds they had raised.
As per ET’s report, both the startups failed to sustain their original business plans for which they had raised funding and so are now returning part of the capital.
Queries sent by Inc42 to both the startups did not elicit any response till filing of this report.
“Fashinza and the broader business-to-business fashion marketplace business of connecting suppliers to brands hasn’t worked at all. Accel is also backing Newme (another fast-fashion brand) after the promise of Virgio becoming fast fashion did not go as per plan,” the report said, citing a person close to the matter.
Fashinza, a B2B marketplace for supply chain for fashion brands and retailers, raised $100 Mn as a part of its Series B funding round in May 2022. The round was led by Prosus Ventures and WestBridge Capital and saw participation from existing investors Accel, Elevation, and DisruptAD.
On the other hand, B2B2C fashion startup Virgio raised $37 Mn in its Series A funding round from Prosus Ventures, Accel and Alpha Wave in December 2022
Fashinza’s cofounder and CEO Pawan Gupta confirmed ET that it is returning capital to the investors and is looking to pivot to a “manufacturing startup”.
After returning the dues, the company looks to fuel its operations with the remaining capital for two years.
Gupta further said that while the model was very scalable, it wasn’t the right fit for the startup and so its founders, team and board decided manufacturing as “the right direction for a company like ours to take”.
Since their last fundraise, both the startups have been grappling with severe crisis and turmoil. Virgio, founded by ex-Myntra CEO Amar Nagaram, pivoted its business model from fast fashion to sustainable fashion in October last year.
Back then, Nagaram said, “While fast fashion is agile, trendy and caters to the growing needs of the young blood in India, it also promotes over production, over consumption. Fast fashion companies use harmful fabrics and exploit labour to cut corners on pricing and quality fuelling the market with what will be sent to landfills. It’s a global crisis and we all are witnessing it. That’s why we’ve made a conscious choice to move our entire efforts to build a circular fashion brand.”
Soon after that, the startup resorted to a cost-cutting exercise, laying off 33% of its total workforce.
On the other hand, Fashinza saw one of its co founders, Jamil Ahmad, leaving the startup to launch his new proptech venture Marrfa, which has recently secured an undisclosed amount in a pre-seed funding round led by Berlin-based VC firm Foundamental.
