Author: Lucia Páchniková
Years ago, they exchanged bicycles for pumping the pedals of business. Isadore Apparel introduced cycling clothing and accessories on five continents. With the help of investors, they have more triumphs within reach.
Brothers Martin and Peter Velits have been building a business model in the form of a global e-shop for the past six years. They toyed with the idea during their active cycling career. Securing the funds to start a business didn't pose such a challenge. After ten years of professional cycling, they shifted gears and began designing highly functional and stylish cycling clothing and premium-quality accessories. The brothers drew on their real-life experience: “We know exactly what cyclists want to wear, what they value and what they don’t,” they say. Their brand meets the needs and demands of professionals and recreational athletes.
From cyclists to entrepreneurs
Four years after establishing the company, which had grown significantly during that time, the Velits brothers reached a point where they had to make a decision. Build a family business with slower growth or seek an investor that would put them on a completely different path? “Outside capital meant the entry of a new investor, which would accelerate the company’s growth, as well as someone else being part of it,” they explain. The partners eventually settled on crowdinvesting. “Everything in its own time. We initially considered other forms of investment. We needed to come to a decision.” say the Velitses.
The brothers carefully weighed the options. Pros and cons. Banks, funds and investors. “We negotiated with potential investors from the United States, Switzerland, the Czech Republic and Slovakia," they explain. Realizing how difficult it can be to get money for marketing or expanding the company. the duo says they looked for contacts and studied materials, realizing that crowdinvesting offered much more.
“We liked the idea of a professional investment platform. Though the initial investment is higher than with standard crowdfunding, the company can have a closer relationship with several investors, which is not possible with thousands of investors in the case of crowdfunding,” they say. With Isadore Apparel, which has an annual turnover of approximately EUR 2 million, the entrepreneurs relied on private investors from the Crowdberry platform. Within three weeks after the call was issued, they raised more than EUR 900,000 of the required EUR 1.2 million. The company’s business model, success in the international market and growth potential appealed to investors.
The investment campaign was in the vein of the seasonality of cycling. “It was important to catch the start of the season with marketing activities,” they explain. Thebrothers implemented the agreement and the launch of the campaign on a professional level. “It lasted two months. We launched the campaign during the Christmas period. We expected interest to be lower.” They said they were surprised by the result. “This confirms that there is interest in our brand and that investors believe in our potential.”The Velitses put the money they received into online and offline marketing activities and the expansion of the distribution network. “We had previously focused on online and invested in PPC, but that wasn’t enough. We decided to cover several communication channels. A complete marketing mix,” they explain.
At the beginning, they focused on Germany, where there are more than eleven million cyclists and bicycle shops are commonplace. “We also have potential in Austria and Switzerland. And we are growing fast here as well,” they say. The brand is also known in the United States, Japan, Korea and Australia. Reaching these markets is one of the aims of the investment injection.
Europe supplied from Púchov
Thanks to that money, the brothers are expanding their network of retail partners that offer the company’s products in their stores. “We don’t plan to have our own. Large e-commerce stores, which combine multiple brands, have gotten involved in online sales. Gro is still our online portal, and we want to maintain that,” they say. In addition to quality, an ecological approach and sustainability of production are important to them. “We supply Europe and the world from Púchov, where we make clothing. We give work to Makyta. The only difference is the United States, where we have a warehouse with which we cooperate and they ensure distribution for us,” they say, adding, “It's important to listen to customers. Then we can identify what they want and give it to them.” Many of the investors that they acquired from Crowdberry have experience in business and corporate governance, thanks to which they are expanding their business know-how. “Their many years of experience cannot be compared with ours. With their help, we will be able to bring Isadore to the level of an internationally recognised brand and get to the front of the peloton,” the brothers say, of their determination to succeed.
Expert on the topic: Daniel Gašpar, partner at Crowdberry
Why was Isadore Apparel an interesting opportunity for investors? What appealed to them the most?
Isadore Apparel is a Slovak family-owned company. It was established by former professional cyclists who successfully transitioned to a business career. Their venture with global reach is as interesting a challenge as the Tour de France or the Giro d’Italia. Enthusiasm, professionalism, conscientiousness and discipline in the management of the company are as important for a successful investment as an interesting product portfolio and customer base in more than 20 countries. In addition to that, interest in cycling and a healthy lifestyle, as well as taking a responsible approach to the environment, play a direct role today. Isadore has long-term stable sales, profit and the potential to grow further. In such a case, it makes sense to connect the company with the capital and experience of domestic investors. Money and value thus remain at home.
What can the entry of “crowdinvestors” mean for the business of companies such as Isadore Apparel?
They obtain the necessary capital for a new phase of the lifecycle and committed investors who promote the company externally, as well as ambassadors and professionals in various fields (management, business and marketing). By working with an investment platform such as Crowdberry, the company gains access to the entire ecosystem. With professional and administrative support, mentoring and access to data, we are able to uniquely connect individual companies with each other.
Isadore Apparel is a successful, fully functioning company with a vision and potential for future growth. It faces new challenges in terms of its future development. What will be the greatest challenges?
To bring out high-quality products that are attractive to customers, build a strong position on the markets in German-speaking countries and, of no less importance, to build and maintain the Isadore brand as a concept in the cycling clothing market over the long term. Entry into the American market will also be a significant milestone.
This article was created in cooperation with the economic daily Hospodárske noviny as part of the Investment in Business series: https://hnonline.sk/prakticke-hn/2108773-bratia-velitsovci-mieria-opat-do-cela-pelotonu