Why we invested in: With Nothing Underneath

This article is part of a new series that will explore which fashion and beauty brands and startups are raising capital, how and why they caught the attention of their investors, and how both sides are navigating the new relationship. A well-crafted shirt, preferably one that’s made-to-measure, is considered an investment in a man’s wardrobe. London’s Savile Row stands as considerable proof: tuxedo, button-down, business or dress shirt, a wing-tip collar or a semi-spread, French cuff, single-button barrel cuff, or a cuff with mitered edges, are just some of the details that make up the perfect tailored shirt. Yet, when it comes to women’s shirts, this exacting level of detail eluded former stylist and editor Pip Durell. “During my career working at Vogue and then Tatler, I noticed that from mid-level fashion to high-level couture brands, no one was focusing on shirting for women. There were several specific companies that made shirts just for men. I thought it absurd because pretty much every woman has a shirt in her wardrobe,” she says. Durell saw the gap in the market and took a bet on it. With a starting capital of £7,000, in 2017 she launched women’s shirt brand With Nothing Underneath (WNU). Now B Corp certified, the brand is on track to hit annual sales of £6.5 million in 2024 — a rise of 85.7 per cent on 2023. In October this year, Durell closed the first round of funding for WNU at £2.5 million. Pembroke VCT injected £1.5 million into the pot, and JamJar Investments £1 million. Established in 2013, Pembroke VCT has previously backed womenswear brand Me+Em, achieving a 16x return on its investment of £955,000 at the time of exiting in 2022. The investor now backs women’s activewear brand Tala among other growth-stage consumer technology, and business services and fashion brands like Bella Freud. JamJar Investments was also set up in 2013 by the founders of Innocent Drinks, Richard Reed, Adam Balon and Jon Wright, alongside partner Katie Marrache, to back the next generation of consumer brands. Some of the early-stage companies it invests in include Deliveroo, Oatly and menswear brand Spoke. Being a growth-stage fashion brand in the current climate is tricky business, especially for women entrepreneurs. According to the World Economic Forum, female-founded companies received only 2 per cent of all venture capital (VC) investment in Europe and the US in 2023. Meanwhile, they face the same challenges as all emerging brands, including economic uncertainty, supply chain disruptions and intense competition. “The last four years, which is the timeline in which these brands we are backing have been established and attempting to grow, have been riddled with Covid, the cost of living crisis, and wars in Ukraine and the Middle East. These are tough things to consider,” says Andrew Wolfson, CEO of Pembroke VCT. A resilient business model is among the fund’s top criteria. “The brands we’ve invested in have, in this climate, managed to achieve growth,” he says. “We have been profitable since conception,” says Durell. A laser-sharp focus on creating good-quality products at accessible price points (between £95 and £245) has been part of the brand’s draw for women looking to invest in good shirts. “Our Boyfriend shirt, which is one of our top three products for 2024, comes in multiple materials. So when someone finds the shape and they love it, they can get it for all different seasons, all-year round,” explains Durell. It’s the same template that the brand applied to the launch of its first trousers earlier this year. Made in wool for the winter, linen for the summer; in two different shapes, the Rampling and the Palazzo; and in two colour variations — they’ve been an easy sell. “Trousers are notoriously difficult as a fashion item,” says Wolfson, who keenly watched the product launch before closing its deal. “The return rates have been phenomenally low, it’s been mind-boggling.” For JamJar Investments, for whom WNU is the first premium women’s fashion brand in their portfolio, they were in search of a label with the potential to be an icon in its category. “That’s what excites us,” says JamJar investor Emily Bullman. “Across the due diligence process, we kept getting the same feedback from customers — they loved the fit, it appealed multi-generationally, and the brand’s repurchase rate is incredible for a fashion brand. We easily think this could be a £250 million-plus exit,” Bullman says. Building a loyal, cross-border fan base WNU will use the funding to expand its presence in overseas markets across the US and Europe, specifically in the DACH region (Germany, Austria and Switzerland), tapping into international demand for British heritage styling. The investment will also be used to make key hires — strengthening the senior leadership team, starting with a chief financial officer — and further developing new product lines. A blazer line will launch in January 2025, followed by knitwear in February. Currently, the direct-to-consumer brand has one bricks-and-mortar store on Elizabeth Street in London’s Belgravia that opened in May 2022. This year, it’s forecast to drive just over £1 million in net sales, says Durell. Plans for opening additional stores are underway for next year, starting with another London post and one in Edinburgh. “Opening a new store is quite an expensive process,” Durell says. “You have to put cash upfront to secure a store to fit it out. It was one of the numerous reasons we wanted to raise capital.” Durell’s expansion plans use her customer’s online purchase patterns as a litmus test. A successful pop-up in Edinburgh last April, with another coming up in Q1 of next year, affirmed her decision to expand in Scotland. As for the US, she says: “[The] Americas have been one of our fastest-growing regions, recording high double-digit growth year-on-year and contributing to close to 10 per cent of our annual sales.” Endorsements from celebrities like Meghan Markle and Emily Ratajkowski have boosted awareness and sales. From 13 to 15 November, the brand is hosting trunk shows with retailers Marfa Stance and The Sleep Code in New York, to test the market. “As investors, we’re normally quite sceptical about US brand expansion,” says Bullman. “We get plans every day from brands wanting to launch in the US. The reality of that is quite different. The investment required to make the US work is way more than people think.” In Durell’s case, the investors were reassured that WNU already has a small but highly engaged consumer base in the US, who is paying large amounts in shipping and wants to be part of the community. “They love that nostalgic British heritage feel,” says Bullman. “The overall goal is to get WNU to a position where the US makes up quite a material proportion of its revenue. With the UK, of course, as its heartland.” Bullman cites French knitwear brand Sézane and its growing success in international markets like the UK and the US as a potential roadmap for WNU. Sézane, which was founded by Morgane Sézalory in 2013 as an online-only retailer, masterfully established a French aesthetic with a growing product line that now includes leather goods, accessories and fragrance in addition to ready-to-wear. The brand’s expansion into department stores in New York and London (most recently with a pop-up at Liberty) leveraged its strong online following. Through careful curation and localised activations, it has built a loyal, cross-border fan base. For Durell, having key stockists is a great customer acquisition tool. Bullman agrees: “A physical in-person store is a way to see the brand and get people talking. Securing a leading retailer destination functions as a seal of approval for the brand.” Wolfson believes it’s an omnichannel strategy that ensures the health and longevity of a brand. “Three years ago, Asos and Boohoo were the darlings of the stock market. Anyone who had a store portfolio was going to go bust because consumers were never going to go back to the store. That was the rhetoric. But then what happened? The ones that did have stores are performing really rather well. M&S had a fantastic turnaround, Next is doing well, and Frasers too. It’s very much about an omnichannel experience now,” he explains. WNU’s growing customer base also stems from its strategic partnerships and collaborations — the most successful one to date being a capsule with celebrity stylist Felicity Kay, released in October. It was also WNU’s first foray into unisex shirts; a selection of classic shirting, including wrap-around styles and exaggerated cuffs that were marketed to both men and women. “Consumers trust brands that collaborate,” says Wolfson, who hopes to have WNU collaborate with other non-compete brands from Pembroke’s pool of VC-backed names such as Troubadour, a men’s leather accessories brand, and spectacles and sunglasses label Bloobloom. Brand collaborations can be successful for several reasons. It could be for brand alignment, to have a consumer view a brand in a similar bracket, or for visibility. Or it could be to acquire more data on a potential consumer base. “I think the one thing people get wrong about collaborations is when you try to get everything out of each one. Not all of them are about big sales, you could do something that has a real marketing moment,” says Durell. Growing slowly While Durell has enjoyed steady growth, this is a tough time for emerging fashion brands. Growth-stage fashion labels are struggling in 2024 due to a convergence of economic and structural challenges. Rising production costs, exacerbated in the UK by post-Brexit tariffs and supply chain disruptions, have squeezed profit margins, making manufacturing and exporting more costly. Consumer demand has also shifted, with cautious spending reducing interest in higher priced, independently designed pieces. Meanwhile, access to capital remains a significant barrier — not just for fashion’s female entrepreneurs — as investors are wary of funding smaller brands in an unpredictable market. These challenges are compounded by the competitive dominance of fast fashion giants, leaving many emerging brands struggling to maintain a foothold in the industry. An increasing number of investment-backed growth-stage brands announced closures or filed for administration between 2023 and 2024, including Australia’s Dion Lee, The Vampire’s Wife and Y/Project. “One of the things that really hurts brands is growing too fast,” says Wolfson. “And yet, every brand wants to grow really quickly. Ultimately, it is a model that falls over. What worries us as investors is when we see businesses that say, ‘Look, we’re doing £5 million in revenue now; and in four years time, we’re going to be doing £200 million.’ That’s fraught with so much risk, and you’re only going to experience a downside. There’s nothing wrong with growing a brand from £5 million of revenue to £25 million or £30 million.” Another mistake young brands make is raising a lot of money and then spending it all too quickly. According to Bullman, employing many people at once can be a huge operational and cash burden on a brand, especially if it makes the wrong hires. “The other mistake is to aim to grow the top line so quickly that all they’re doing is spending to acquire customers who actually aren’t even the right type of customers for the brand,” she adds. Wolfson echoes this point. “Any fashion business or any marketing department in a fashion business can look really good by acquiring customers. But if those customers are the wrong customers, you just end up with a really high returns rate because you’re advertising on TikTok when your customer is actually in their 30s and 40s. So, it’s really about understanding your customer and fishing in their pond,” he says. Durell and her team, who already have a strong customer base and growing community, were cautious to raise funding for an exact amount that they needed. They have no plans for a second round of funding anytime soon. “We are incredibly proud to say we secured our first choices,” says Durell. “Pembroke has historical success in retail and understands the inner workings of a fashion brand. They were our first choice of lead investor and we were thrilled to secure them. JamJar is a fund led by entrepreneurs. They think outside the box and look at the landscape differently, that was really exciting for us and the perfect pairing to Pembroke.” Ultimately, Bullman compares the investor-brand relationship to one of marriage. “You are going to be with this person for the foreseeable future. And you have to take money from people you actually like and have a shared appreciation of values with.” Correction: Article updated to reflect that Pembroke VCT achieved a 16x return on its investment in Me+Em, not 16 per cent as previously stated. (15/11/24) To receive the Vogue Business newsletter, sign up here. Comments, questions or feedback? 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