BonneGueule raises €6.5M… and we tell you everything

Bank financing and financing assistance

Bpifrance's help is manifold. They intervene via bank financing (bank loan, export aid) but also assistance with access to credit (bank guarantee of loans granted by private banks).

At this time of health crisis, it is Bpifrance which is setting up the “PGE” (State Guaranteed Loan) or “Rebound Loan” system to help companies with a cash flow deficit.

State Investment Fund

Bpifrance also invests as an investment fund in many sectors (especially those where private players rarely go... such as fashion).

And it’s Bpifrance’s “Fashion and Finance II” fund that invested in us .

A network of business leaders and experts

It's not complicated, whether you need an expert in logistics, management, or production, they have a contact for everything! Not to mention the multiple connections with other business leaders.

It is for example thanks to them that we were able to meet the former CEO of Petit Bateau, Patrick Pergament, which was one of the most memorable meetings of recent months.

We also had access to really very rich consulting missions .

There was even the Hyères festival, an event dedicated to photography and fashion, in the famous (and intriguing) Villa Noailles, where we took part in a conference .

Coaching and training

Finally, we were able to expand our horizons by discovering other markets from a “fashion business” angle.

If we were able to go to South Korea for the first time, it was also thanks to them. To better understand how Seoul or New York were structured, gain perspective... and see if there is potential for us .

And we are even at the moment (virtually) on school benches, alongside 31 SME managers, within the Fashion and Luxury Accelerator.

Finally, Bpifrance is struggling during the crisis with daily webinars, insider information, dissemination of the latest market developments following Covid-19, wikis on crisis management, etc.

Fundraising is intellectually very interesting to experience, but it's not really a pleasure: it's long, it takes time and mental load. Lots of mental load .

There are many people involved, who ask very specific, challenging questions. Sometimes it takes hours of work to gather the data that accurately answers a single question.

It starts with the creation of the fundraising documents: we discuss, we refine the strategy with our advice, with the objective of creating three very important documents:

• the 1-pager, which is an ultra-impactful, hyper-concise summary... in a single page. A bit like your fundraising CV!
• the deck, a large file of 70 slides, and each page contains graphics and models. This requires an enormous amount of information reprocessing work. The challenge is to summarize what BonneGueule is in a file, while being both exhaustive... and digestible!
• and the pitch, a selection of 15 features from the deck which will form the presentation support. Here, it is the rhythm and the sequence of ideas that must be perfectly oiled. In two voices, since we are two founders.

We then launch the first meetings with funds. And we say to ourselves that so far, we have learned a lot of things, it's rich, and even fun to meet all these very intelligent people.

This is where you have to manage repetitiveness: "pitch" the story of BonneGueule for 2 hours, and then pitch, pitch, pitch again with other funds... a good twenty funds... Sometimes the same one several times day.

And with Generis alone, we pitched 3 times! .

And after the pitches, there are the “Q&A meetings”, where you are asked lots of questions, and from which you come out with a suitcase of answers to provide.

By drinking our only weekly pastis, we could at least console ourselves by saying that our file is popular, and that ultimately we find much less funds than certain entrepreneurs who sometimes have to exceed a hundred meetings!

But the most difficult thing is not to present BonneGueule and answer the questions , but to present the same pitch, and answer the same questions, always with the same enthusiasm, the same motivation, and without missing the nuance of a question to which you risk answering too mechanically.

And when you say to yourself, it's okay, we've chosen our fund, it's chosen us, let's go have a drink, well that's where the audit begins.

You then have to gather hundreds and hundreds of documents, and when you are not asked for a new data analysis , well we are asking you in dribs and drabs for this administrative document from 6 years ago, of which you do not even know the existence, and which you will have to search in 10 years of history, to realize that your accountant of the time forgot to create it

Oh yes, and otherwise, you are on point with the forced exit (drag along) or joint exit (tag along) clauses. You know how to argue it, the discussion on rank 1 preferential liquidity which must clearly differentiate A shares from rank B and C shares. Well, neither do we, but we had to get started on it. Yes, even a relatively “simple” lift like ours remains complex. And that's normal, we're still talking about a very large sum.

In short, it's a real marathon, started in July 2019, in the middle of a heatwave, and finished in mid-March, in full confinement.

Fortunately, we were supported by incredible people.

And because fundraising, like any project, is always teamwork, we would like to thank them:

• Clipperton , the investment bank that supported us during the process. An investment bank is in fact more of a consulting company than a bank . Their role is not to manipulate capital, but to help companies raising funds to find the investment funds that are most suitable for them, and to defend the interests of the former during negotiations. Thanks to Caroline, Milan, Thomas, Eloi and of course Thomas who is a big fan of our clothes .
• The Fed , which is not the Federal Reserve of the United States , but our auditing firm. Thanks to Maldoror, a very old BonneGueule reader, who was unfailingly responsive, even on vacation .
• Villechenon , our specialist lawyers. Thanks to Morgan and Amélie for their commitment and patience, from the first day to the last second.
• Bertrand our amazing DAF, PH our very unique Single Accounting, Loan the Junior DAF (Tenor?), Simon the data-analysis ace, and all the others who lent us a hand at one time or another. You have to do it to imagine the work that all this represents!

Finally, the very special side of this lifting is that it ended in full confinement. And with the economic context deteriorating very quickly, we make no secret of the fact that stress was starting to mount, with a question in the back of our minds: “ What if this fundraising did not happen because of Covid-19? "

Fortunately Generis and Bpifrance played the game to the end and kept their commitments, whereas other more cautious funds stopped their projects at the same time with other companies.

In entrepreneurship, it is customary to say that it is when things are bad that we see what type of funds we have. And this lifting in the middle of the crisis will certainly have been a good indicator.

In practice, this €6.5M includes the buyout of certain outgoing minority shareholders

. But above all, this sum must finance us for the next 5 years. And it is not “so important” for a fast-growing company which achieved a turnover of €8.3 million excluding tax in 2019.

There are all scenarios within companies.

Most young companies live their life, growing quietly each year, without the need to raise funds because the growth is modest, and there are therefore no strong needs for systems, tools, human resources, stocks, etc. . to be set up in advance. These are also companies that do not interest investors , so the question of raising funds does not arise in any case, unfortunately even in the event of cash flow needs.

A fraction of young companies, on the other hand, are experiencing hyper growth.

Among them, there are those so profitable that they don't need to raise funds, but in fashion, I don't know of any... Even players like Veepee or Showroom Privé have had to raise funds, even if even they do not advance cash for their inventory purchases. . This is obviously the best scenario, but it is rare.

There are also profitable companies, but which need financing to support their strong natural growth, due to lack of sufficient cash flow in the medium term. . This is the case with BonneGueule. These companies call on “development capital” investors , which finance fast-growing companies, but only if their profile is not too risky... hence the healthy imperative to target profitable companies.

Finally, there are companies that raise a lot of money even though they are not profitable at all. And again, it's a whole universe with many scenarios. There are companies that count on very long-term profitability, as is often the case in technology, research laboratories, internet platforms, home catering services, electric bicycle fleets, etc. and it is therefore entirely justified to raise funds. Of course, not all of them will survive, but that is the price of technological innovation. And they have another type of fund in front of them, which we call “risk capital” funds. ready to finance high-risk companies, and to accept that 9 out of 10 companies achieve nothing significant, as long as the tenth is the next Über, Deliveroo, ManoMano, Vestiaire Collective, etc.

But then, our opinion in all this. Well it all depends on the context. The company's growth profile simply must be consistent with the investors it faces.

In our case, with our good growth, we could have insisted on being financed by a "VC fund", which would have had much higher growth expectations, at the risk of distorting the project. We therefore preferred to discuss with “cap dev funds”, more aligned with our desire for natural and sustainable growth.

But others could have made other choices, “take the risk”. We respect that too.

It's all about being consistent in the end, between what you say to your team, to your clients, to your investors, to your loved ones, and to yourself when you look in the mirror. This alignment is still important to us personally. This is what we would recommend to fellow entrepreneurs, whatever their context: stay consistent.

No, this is a classic capital increase.

Since 2012, we have regularly used bank loans to finance our organic growth. However, operational costs (payroll, logistics costs, production) cannot be financed with a bank loan. Just like investments (IT systems, product development, new stores) when they exceed a certain threshold. Although our historic bankers (BNPP and HSBC) have always supported us morally and financially.

The contribution of external capital will precisely strengthen our equity , and allow us to make more significant use of bank loans at the same time.

Crowdfunding is an interesting start-up mechanism for young companies, and sometimes also a creative communication relay for companies launching a new product, but it is not a financing method suitable for financing a growing company after its first years. years of existence.

In fact, we would never have raised a fifth of the amount with crowdfunding. And this was already the case during the first fundraising.

Beyond that, you should know that crowdfunding in significant amounts also involves classic investment funds "among the crowd" (for around 70% of the amount), and not exclusively individuals as one might believe. We therefore partly fall back on the classic investment scenario.

And finally, we have to count on a certain administrative burden when we have to report to a hundred people (who would still have contributed more than €50,000 on average in our case, if we had found a hundred).

Nothing changes regarding the media.

We continue to invest in its development, and we have never written so much free, quality content, or responded in a personalized way to as many questions as in 2019. This is thanks to our team which includes an editor-in-chief, two editors and two community managers.

The media therefore remains one of our reasons for existing: to explain the true price of things, to educate without belittling, to bring transparency to the market. Where also being a brand allows us to prove through facts that another path is possible on the market.

Confidentiality for the sake of confidentiality has never been our thing. We believe in fashion that is shared, not in exclusive clothing for a few happy few .

That said, we understand that some may look for confidentiality in a brand, but there is still room for improvement in that regard! BonneGueule achieved a turnover of less than €10 million. This is both significant for an emerging brand, but still a fraction of what other legacy creative brands achieve. And a small part of a French market which represents several billion annual turnover.

We may know our clothes by heart (still happy!) and yet we rarely come across them in the metro or in the street.

No, it's quite the opposite. The objective is to further structure the company, to make it reach a comfortable size with economies of scale on raw materials, manufacturing and logistics on the one hand, and better amortization of its fixed costs. on the other hand.

And this is not a hypothetical scenario, but what has already happened at different times in our history, and in particular thanks to the financial contribution of business angels from the first fundraising .

Our pricing policy always seems to us to be the right one: increasing them would not correspond to our vision, lowering the quality would not make sense either. And lowering prices further would not be economically viable, despite the many advantages of our economic model (very low communication and marketing costs, very strong loyalty, communication and distribution via our own channels, notion of fair prices, etc.).

No, that’s still not our strategy.

In the past, we have opened ephemeral corners at Printemps, at Le Bon Marché, or under the Louvre Pyramid, but for the purposes of market knowledge, communication or to test neighborhoods before setting up our own boutique. .

And it is also us who declined a renewal of partnerships with department stores, or even La Samaritaine which will re-open soon.

No, they seem to us to be at the right level today depending on the month . The idea is to maintain a low ratio of expenses to turnover, and to continue to maximize word of mouth and customer loyalty by doing our job as clothing enthusiasts to the fullest.