Digital Brands Group (DGB), a “digital-first clothing & lifestyle brands” best known for DSTLD, has closed on its most recent securities crowdfunding round. DSTLD / DGB raised $2.234 million in a transatlantic investment offering. US based SeedInvest leveraged its ongoing relationship with UK based Crowdcube to allow investors in both countries to back the early stage fashion firm. The preferred equity offering was selling shares in the compay at a pre-money valuation of $35 million. In the US, DGB used the Reg A+ securities exemption seeking to raise up to $10 millionn. In the UK, there is no alphabet soup of offering structures – you just need to file a prospectus once you raise over €8 million.
In many ways, DSTLD is indicative of the future of cross-market securities offerings enabled by investment crowdfunding platforms that leverage their compliant platforms to list offerings in young companies – especially those with a retail facing service or product. Investors are less concerned about the jurisdiction of the offering than prospects for the company. The UK and US share many market characteristics and thus represent an opportunity for firms lookingn to expand their market exposure.
DSTLD is an LA-based brand that has cut out the middle man to offer high-quality clothing minus the high cost. Starting first with jeans for both women and men, DSTLD has since migrated into other clothing segments including shirts and coats plus accessories for the direct to consumer business. Last December, was their best month ever generating $1.1 million in sales.
DSTLD was Digital Brands Group first brand but recently the company added Ace Suits, a menswear site, as a complementary clothing vertical. Men may order suits online that use Italian fabric which are crafted in Turkey.
Digital Brands Group intends on acquiring one to two new brands each year becoming a portfolio holding company driving scale by leveraging in house expertise. As DGB purchases more brads they hope the value of shares will rise.
Of note is the fact that the company is planning on initial public offering (IPO) on the AIM in March. AIM is the junior market of the London Stock Exchange. AIM claims to be the most successful growth market in the world. Since AIM launched in 1995, more than 3,600 global companies have listed on AIM.
Digital Brands Group CEO Hil Davis says AIM is what NASDAQ used to be back in the day. It is interesting that the US-based exchanges & marketplaces lost out to the listing for London.
A recent presentation by Davis sheds light on the decision making process. Davis says that AIM is all about small-cap offerings. NASDAQ is good if you have a market cap of $250 million or more, but they aren’t they aren’t there yet. Maybe someday.
Davis is sensitive about listing shares at too high of a valuation too and he points to companies that made that mistake. This is good to hear. Too frequently, small companies have outlandish expectations as to their valuation and early investors can be the loser in that equation.
DBG says the IPO valuation will be post money and perhaps more – as the company may be queuing up an acquisition in advance. Of course, you will not know until the offering is prepped by the bankers.
If you are an investor, once DBG lists on AIM your shares will be tradable and thus you will have liquidity so you may sell – or hold.
DBG / DSTLD is a crowdfunding issuer to watch. Depending on how the AIM listing goes other issuers may follow. And perhaps, US-based exchanges and US policymakers will take a closer look at what the UK – AIM is doing correctly.
We are looking forward to March.
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