Joanna Griffiths has built one of Canada’s most successful new consumer brands and fastest-growing companies with little outside funding. It’s not for lack of interest: The founder and chief executive officer of women’s undergarments startup Knix Wear Inc. has repeatedly turned down venture capitalists who offered to invest tens of millions of dollars.
Until this year, Ms. Griffiths’s line of fashionable-but-functional intimates has generated far more from crowdfunding campaigns than the $1-million raised from angel investors and small funds.
”Whenever I [considered raising money from investors], the main reason had to do with ego or proving something to somebody else," she said. "That’s not a reason to sell part of your company.”
But with Toronto-based Knix set to top $50-million in sales this year, primarily through its online store, Ms. Griffiths has decided it’s time to tap outside capital. Knix has raised $5.7-million in a financing led by Acton Capital, the German venture-capital firm that previously backed Canadian e-commerce startups Indochino, AbeBooks and Chefs Plate.
“I felt it was time for us to really invest and level up for the next chapter of growth,” she said in an interview.
This has been a pivotal year for Knix: The 75-person company began selling wireless and maternity bras and swimwear, hired U.S. retail veteran Steven Hudson as chief operating officer and opened its first two stores, in Vancouver and Toronto.
It’s also a big year for the upstart category Knix represents: purveyors of “body-positive” undergarments marketed to women who don’t see themselves represented in Victoria’s Secret ads (Knix uses real customers, of all ages and sizes, to model its goods).
San Francisco-based ThirdLove, whose co-CEO Heidi Zak blasted Victoria’s Secret in a 2018 open letter for selling “a male fantasy to women,” raised US$55-million in venture capital, while New York-based Lively was acquired by Japan’s Wacoal International Corp. for US$85-million. Meanwhile, L Brands Inc.-owned Victoria’s Secret, beset by declining sales, announced the cancellation of its televised special that features supermodels dressed as angels.
“Over all, the category is very big,” said Acton’s Hannes Blum, a Knix board member. “I think there’s room for multiple brands.”
Knix is also benefiting from overall growth in Canadian apparel e-commerce, said Randy Harris, president of market research firm Trendex North America. Because the cost of market entry is low, retailers can afford to go after niche consumers that were underserved by mass-market retailers, offering a wider range of sizes and emphasizing different needs.
Mr. Blum said lingerie is the ideal e-commerce product: It’s lightweight to ship and customers tend to become repeat buyers. He added that Knix is “first order profitable,” meaning it makes money on its first order from a new customer (orders average $115 and include multiple products). Returns are low and 40 per cent of first-time buyers make a repeat purchase within 18 months.
“This is where outstanding direct-to-consumer companies stand out,” Mr. Blum said.
Ms. Griffiths came up with the plan for Knix while studying for her MBA at INSEAD, the French business school, in 2011-12. Inspired by conversations with her mother, a doctor and interviews with hundreds of women, the Toronto native planned out a business to invent and sell leak-proof underwear (she now has two patents).
Bladder and menstrual leaks “are such a big part of women’s lives,” but they were poorly served, except by adult diapers, she said. "I thought, if somebody could make a product that really spoke to younger demographics – or how women feel in general – it would be successful.”
She raised seed funding from INSEAD alumnus Kathryn From, a Toronto lingerie company founder, and John Bahr of Dallas-based AHR Growth Partners, who she met at a trade show in 2015. Ms. Griffiths succeeded in getting Knix underwear and bras into hundreds of stores across North America, including Hudson’s Bay and MEC locations.
But about three years ago, she pulled out of wholesale to take control of the user experience and sell online only. “It was the scariest thing I’d ever done,” as wholesale accounted for half of revenue. Four weeks later she had made up what she lost in stores.
Ms. From praised Ms. Griffiths for being a frugal and adaptable operator who has made women “feel good about themselves” and highlighting such issues as postpartum depression and breast cancer in campaigns. “She basically said [to customers] ‘Hey you’re fantastic the way you are.'”