Poshmark’s IPO Has Implications for California’s Fashion Startups
California-based fashion reseller Poshmark recently had its IPO, and the early action surrounding the company has been resoundingly positive. CNBC’s report on early trading indicates in fact that from its initial listed price of $42 per share, Poshmark jumped about 130% by the time it started trading (at $97.50). This is a very good sign for a very promising company that essentially gives sellers and buyers alike an easy place to deal in clothing and accessories. What is interesting beyond Poshmark’s early success on the open trading market though is what implications if any it might hold for California’s fashion startup scene. Traditionally this is a state that’s very active with regard to independent boutiques and new fashion companies — particularly in and around the Los
Angeles area. Naturally, the COVID-19 pandemic has put a damper on this usually-active startup scene. But there are a number of reasons to expect fashion entrepreneurism in the state to bounce back quickly. For one thing, we know that success on the California startup scene tends to snowball. Arguably the main reason the state is such a hub for entrepreneurs — in tech, fashion, food, and elsewhere — is that there are so many success stories. People observe the scene in California and believe they too can thrive there. This is unlikely to change because of a single year of disrupted startup activity. In fact, while this is a difficult assertion to verify just yet, it’s reasonable to assume that there are likely numerous prospective fashion startups just waiting for the right time to launch after delaying in 2020. Another positive for prospective fashion launches in California is that some of the basic structures that enable so much state-wide startup activity are still very much in place. On the most basic level, it remains procedurally simple to start a limited liability company (often the most popular choice for startups going official). ZenBusiness’s explainer on the California LLC startup process states clearly that every necessary obligation can be fulfilled online. And really it just comes down to filling out a few state government forms. Beyond basic setup, meanwhile, the funding situation — another aspect of California’s appeal to entrepreneurs — remains encouraging. There’s a great deal of venture capital money in the state despite COVID-19, such that well-run startups with clear potential will still be able to secure funding moving forward. On top of these basic aspects of California’s business infrastructure and startup appeal remaining intact, there are also already some innovations that are paving the way for fashion boutiques’ survival in the early post-COVID days. In a general sense, businesses around the state have had experience moving in and out of lockdowns, and in-person fashion boutiques have already established models for how to space out customers, offer sanitization reassurance, and so on. More uniquely, we’ve seen some bigger companies and designers popular throughout the state trying new things to get the word out about their brands even amidst lockdowns. For instance, we just recently highlighted the virtual launch of Skye Drynan’s new Dulce Bestia collection, which hinted at just what creative designers can pull off virtually as we wait out the virus. What all of this means is that we’re optimistic there will be a successful burst of fashion startup activity in California as we slowly get COVID-19 under control this year. Circling back to Poshmark though, we are also interested to see what effect the newly public company has on fashion entrepreneurs in the state. Because as much infrastructure, inspiration, and funding as there still is throughout the state, Poshmark provides a much simpler way of profiting off of designs. Already, there have been some monumental recent successes through the service. Most notably, Business Insider’s account of a furloughed worker who has been hitting six figures selling through Poshmark is likely to lead many people with aspirations in fashion to give this a shot. It’s possible that stories like this, combined with Poshmark’s growing publicity as a result of the IPO and the difficulties for startups posed by COVID, could lead some to prioritize resale options over launching their own businesses. Time will tell.