With automation dominating manufacturing, the days of quality craftsmanship seemingly are ending. This NYC Startup is preventing that from happening. Founded by two Wharton graduates, Koio delivers high-quality fashionable sneakers at an accessible price point. Manufacturing in Italy, the sneakers use the finest of leathers and are constructed by artisans that have a wealth of experience producing leather goods for some of the most prominent luxury brands. The company had a stellar 2017 with revenue increasing over 400%. For 2018 the company plans to increase its geographic footprint, product lines, and develop new collaborations. The direct-to-consumer brand has already partnered with the likes of JonBoy, Game of Thrones, and The Beverly Hills Hotel to produce customized and exclusive limited edition collaborations.
AlleyWatch chatted with cofounders and co-CEOs Johannes Quodt and Chris Wichert about the company, its inspiration, the luxury footwear market, and the company’s most recent round of funding, which brings the company’s total equity funding raised to $4.3M.
Who were your investors and how much did you raise?
We raised $3 million in this Series A financing round led by Acton Capital Partners and supported by other institutional and private investors including Brand Foundry Ventures, Winklevoss Capital, actor Miles Teller, and director and producer, Simon Kinberg.
Tell us about Koio.
Koio is the leading direct-to-consumer leather sneaker label bringing old-world luxury into the digital era. Constructed in Italy with the finest calfskin leathers and hand-finished with unrivaled attention to detail, each pair of Koio sneakers is crafted over a period of 4 hours by the artisans responsible for Chanel’s leather goods. The end product is a truly fine sneaker, offered at an incredible price.
How did you come up with the name Koio?
The name, Koio, is a play on the Italian word for leather, which is cuoio.
What inspired you to start Koio?
While getting our MBAs, we initially bonded over our shared home country (Germany) and love of quality leather sneakers. Vowing to turn our passion for high-end kicks into a bonafide business and recognizing that traditional luxury labels were no longer connecting with customers in meaningful ways, we set out on a mission to redefine the luxury leather goods category with Koio — fusing old-world craftsmanship with a modern ready-for-anything ethos and accessible pricing.
How is it different?
Constructed in a Chanel-owned factory in Italy and promising ethical manufacturing, Koio shoes offer the pinnacle of craftsmanship and quality, but retail for hundreds of dollars less than sneakers from traditional luxury labels. The brand is committed to bringing old-world luxury into the digital era through both its online and in-store retail experience.
Koio’s ingenious approach to out-of-the-box collaborations is an extension of the brand’s mission to redefine the luxury leather category – fusing the inspiring stories of collaborators that share the brand’s rebellious DNA with physical products, in-store events and a strong focus on digital activations. With its collaborations and by championing a community of go-getters, Koio wants to inspire customers to be confident in taking risks to write their own unique life stories. Through optimized customer communication, and fast feedback and production loops, the direct-to-consumer brand is able to react to trends faster, quickly releasing new products and offering them at more accessible price points than traditional labels, without traditional retail markup.
What market you are targeting and how big is it?
Footwear is the fastest growing luxury product category, with a global market size of $18 billion. The shoe market grew by 10% in 2017 and is expected to continue on its current trajectory. Koio has been focused first on disrupting the $3.9 billion sneaker market, which also grew by 10% last year. In the long-term, we’ll be expanding into other categories of leather accessories, which are part of the $81 billion personal luxury accessories market. While we’re maintaining our commitment to growing our online and physical presence in tandem, we recognize that online is the fastest growing distribution channel for luxury goods – Bain & Co. estimates that the online channel will grow from 9% of the total market to 25% by 2025.
What’s your business model?
We sell high-end leather goods direct to consumer – mostly via our website, koio.co, and our stores (two locations in NYC and one in LA coming soon).
What was the funding process like?
The funding process went very smoothly and we closed our round in less than 3 months. Over the past year, we built relationships with a lot of investors and were fortunate to also see a lot of interest from outside investors. It was important for us to find a lead investor that shared in our vision of where Koio was headed and, also, was committed to our values of sustainability and authenticity. In the end, our lead investor did very thorough due diligence and even visited our manufacturer.
What are the biggest challenges that you faced while raising capital?
Deciding on the right partner that was the best fit to grow the company was the biggest challenge we faced while raising capital.
What factors about your business led your investors to write the check?
There were a number of factors the cemented interest from our investors and led them to write the check. Koio’s revenue grew by over 400% in 2017 alone, much in part to our introduction of unconventional collaborations and community-approach to storytelling and events. We’ve managed to really resonate with modern consumers in ways that traditional luxury labels have struggled to do in recent years, and have no established a strong and loyal brand community. Our digital and physical presence and reach have grown in tandem and really compliment one another, and our investors are eager to see us continue to grow with the introduction of new products and locations.
What are the milestones you plan to achieve in the next six months?
With this new funding we are looking to further improve our online and in-store customer experience, grow our store footprint in new markets, expand our footwear portfolio and build the Koio team.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Definitely focus on building relationships with investors early on and aim for profitability sooner rather than later – this will make your company less dependent on outside capital. Also, it’s important to find the right strategic partner that will share in your vision 100%.
Where do you see the company going now over the near term?
Over the next year, we’ll be expanding our footwear portfolio with a few new, unique styles and will be releasing interesting new collaborations. We’re also, opening a pop-up store in LA and will continue to add strategic physical locations to complement our online offering. Our goal is to be the go-to destination for millennials who are looking to purchase the most high-end, authentic product for a fair price.
What’s your favorite restaurant in the city?