Why are some of the biggest names in venture capital pumping $2.1 million (£1.35 million) into a fashion blog called Business of Fashion? Because it's got all the ingredients to become a successful publishing business catering to a niche audience.
With multiple potential revenue streams targeted at that niche, it's a rare invesment in a content-led business from the VC world, which spends much of its time searching for the next Facebook.
Index Ventures, the VC firm known for early-stage investments in tech companies such as Skype, Dropbox and Lovefilm, has led this seed funding round for BoF. Index has previously invested in other fashion startups, including a $40 million investment in fashion blog and shop Nasty Gal and online stores Net-A-Porter and ASOS.
Other investors include French luxury goods group LVMH, owner of Louis Vuitton brand. The site's foundations suggest they might get a decent return.
BoF founder and CEO Imran Amed tells TheMediaBriefing the site reaches one million people via the site, social media and an email newsletter with 30,000 daily subscribers (read his letter to his community today here).
That audience has been built with a remote part-time staff and the seed funding will be used to get office space and build a full-time editorial staff, as well as improve editorial technology, starting with a new responsive website.
"We’ve just moved into an office in Soho (London)," says Amed. "My managing editor has moved to London from New York and we've hired a new full-time editor to focus on in-depth content. But we won’t be building a big newsroom of people pumping out commoditised news content."
Disruption = opportunity
Amed, a former McKinsey consultant, started the site back in 2007 and early on identified a gap in the market for fashion industry analysis and commentary on seismic changes it was going through. "The most prominent of these was the digital revolution. The fashion industry was suddenly being discussed online, "he says.
"Another other major force that began to really have an impact was globalisation. In the mid-2000s you really started to see the rise of global markets, and the global luxury consumer."
Although 30 percent of BoF's audience is based in the US and another 10 percent in the UK - emerging countries including the BRICs contribute between four and five percent of its readers.
But rather than taking on a large staff to deliver commoditised content, BoF takes a three-pronged approach to content that doesn't involve newsgathering and reporting in the traditional sense:
-- Original analysis and expertise: At the core of the site is content written by Amed and other editors and contributors. Focussed on the business of fashion as a whole rather than specific product areas, the content has a particular emphasis on industry trends.
-- Curated content: This is chosen from around the web and delivered in bitesize summary page called daily digest.
-- Syndicated content: The site also takes syndicated stories from traditional news sources such as AP, Reuters and Bloomberg.
Not-just a B2B publisher
Amed's content strategy has helped build a large following for BoF - but it's not just a traditional B2B audience.
While around 60 percent of BoF's audience is drawn from what Amed describes as "bona fide fashion professionals" and around 10 percent are students, another 30 percent are wealthy consumers with a keen interest in fashion.
That means BoF has a broad range of potential revenue streams to pursue.
-- Events: Amed has already run a number of small-scale events, such as a one-on-one interview with Natalie Sara Massenet, CEO of Net-a-Porter. Those events attracted both professionals and consumers.
-- Advertising: BoF has already experimented with sponsored content and advertising and opportunities remain for fashion-related jobs, industry tools and products. However, Amed says the high-value of the consumer segment of his audience - 90 percent of whom are university educated - mean it will also be appealing for other luxury brands in areas such as consumer electronics.
-- Structured data: The ability to read trends rapidly can make or break a fashion product line and other fashion trends analysts such as WGSN have developed information services for the industry that tap into this need - something BoF will get into in the future.
"We have no concrete plans," says Amed. "But we want to do some sort of data-based analytics service based on a subscriptions model."