Fast fashion is an industry is mired in labor issues and copyright issues, and has a huge impact on the environment due to wastewater and carbon emissions. It also happens to have the potential to make a lot of money quickly.
But despite these problems, venture capitalists won’t stop loving the industry.
On Wednesday, my colleague Manish Singh wrote an scoop about Accel’s potential investment in Indian fast-fashion startup Newme. Newme is an app-based retailer that produces 500 new items every week with an average price of $10. The news comes a week after the company completed a seed round of funding.
Accel and Newme did not respond to requests for comment.
Newme looks a lot like many other venture-backed fast-fashion startups, such as Shein, which has raised $4 billion, and Cider, a startup backed by Andreessen Horowitz that’s valued at $1 billion. Cider says its on-demand inventory makes it a more ethical fast fashion option. However, this is still up for debate.
Accel’s potential investment in Newme impresses me for several reasons, the biggest of which is that I’m not entirely sure why venture capitalists would back these companies.
Fast fashion companies quickly gained popularity and developed a huge following because they were able to get clothes from the runway to local department stores in record time. But the truth is, they often can only produce clothes quickly by taking shortcuts. The only way to make this strategy work is by using cheap materials and cheap (and probably underpaid) labor, and in many cases, by copying the design.
