After a year of explosive sales growth at e-commerce company Knix Wear Inc., founder and chief executive officer Joanna Griffiths decided last fall that it was time to raise money to fund the next phase of expansion.
The Toronto-based company was riding a pandemic-fuelled surge in online shopping, and she expected demand from investors would be strong. But she set an immovable ground rule: Ms. Griffiths was visibly pregnant with twins, and any investor who raised that as a concern would be immediately disqualified from bidding.
“I don’t care if they gave us the highest valuation, it didn’t matter,” Ms. Griffiths said.
Having built Knix into a fast-growing and profitable company, her track record should have spoken for itself. Knix, which sells women’s underwear and apparel, saw its sales jump to $75-million in 2020 from $50-million in 2019. In the past 12 months, as of mid-May, sales have hit $100-million.
But Ms. Griffiths also knew that female entrepreneurs still grapple with systemic bias from venture capitalists, including questions about their dedication to the business if they choose to have children. So as Knix’s investment bank, Robert Baird & Co., started the process, she drew a line in the sand. A “small number” of prospective investors were ruled out, she said.
“If that’s how they felt about me as an entrepreneur and as a female founder, they sure as hell were not going to understand the mission of Knix and what it is that we’re trying to accomplish,” Ms. Griffiths said.
On Tuesday, Knix is announcing it has raised $53-million in the funding round, led by New York-based private-equity firm TZP Group, and including some existing Knix investors such as Germany’s Acton Capital. Supermodel Ashley Graham has also invested. Ms. Griffiths remains the largest shareholder.
Knix plans to use its share of the proceeds (roughly one-third is going to buy out some early shareholders) to fuel an ambitious growth plan, including expanding further into the United States, opening more bricks-and-mortar stores, and launching more product categories. The company plans to hire 200 people in the next two years; it currently has roughly 125 employees.
Knix began with a crowdfunding campaign in 2013, to launch a line of leak-proof underwear. Knix built customer loyalty as it sold its products online in Canada and the U.S., by talking openly about the reality of women’s bodies – in contrast to industry giants such Victoria’s Secret, which for years treated menstruation and leaks as an unmentionable blight on the sexy, size-zero ideal they advertised.
The success of Knix and other startups such as Thinx have spurred competition: Big lingerie brands are now selling their own period underwear, including Aerie, owned by American Eagle Outfitters Inc., and Pink by Victoria’s Secret.
Knix has expanded beyond its flagship product, selling items such as bras, leggings, sweats, pyjamas, shapewear and swimsuits. The company is now planning to expand further. During a test run in October, Knix sold roughly $1-million of leggings in 27 minutes.
“We did it just to see if customers were interested in buying broader apparel items from us, and the answer was a resounding yes,” Ms. Griffiths said.
The company’s plan to open more retail stores last year – it currently has two, in Vancouver and Toronto – was delayed by the pandemic. Knix now hopes to open roughly 20 locations, half in Canada and half in the U.S., within three years, while continuing to build brand recognition among online shoppers.
“COVID certainly [accelerated] e-commerce adoption – it’s anybody’s guess, by two years, ten years, it depends what you’re reading,” said Erin O’Brien Edwards, a partner at TZP Group. This has translated into momentum for direct-to-consumer e-commerce companies such as Knix, she added. “Businesses that have great product … really have an opportunity to gain an advantage in this situation.”
Knix has also built brand loyalty by offering a wider range of sizes, from extra-small to triple-XL – equivalent to sizes 0 to 28, with bras ranging from 30-inch to 44-inch bands and A to soon-to-launch H cups. The brand has made a point of showing real bodies in its advertising, sometimes recruiting customers as models.
“Consumers want to buy brands that they believe are authentic and that they connect with,” Ms. O’Brien Edwards said. “That is very much part of the ethos and DNA of Knix.”
Ms. Griffiths is one of several female technology entrepreneurs who have celebrated motherhood as part of their leadership.
Katrina Lake, CEO of Stitch Fix, and Whitney Wolfe Herd, CEO of Bumble, both attracted praise when they held their toddlers as they rang the stock market’s opening bell to mark their companies going public, in 2017 and this year, respectively. Tracy Young, ex-CEO of PlanGrid, a San Francisco construction software startup that sold to AutoDesk in 2018, spoke in a TED Talk about the pressure she felt to prove her continuing dedication after she gave birth. Both her own leadership and the company culture improved “when I dared to be fully myself,” she said.
“There are way more women starting companies compared to three to four years ago ... but it’s still a pretty low number. There’s a lot to do to get anywhere near to gender parity,” said Michelle McBane, managing director of StandUp Ventures, a Toronto-based seed stage financier that backs women-led technology startups.
She said stories such as Ms. Griffiths’ are important in starting some long-overdue conversations in the venture capital space. “It’s time for a change and a reset in an opaque industry that has operated by a certain set of rules.”
Knix closed its funding round three days before Ms. Griffiths gave birth in March. The timing was deliberate.
“I wanted to show myself and show other female founders that this is possible, that the world is starting to change, that you can raise money while you’re pregnant, if you build a business that has metrics and you have a community that supports you,” Ms. Griffiths said. “... I wish I’d seen this four years ago.”
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