Due diligence and referencingKruger: We had one major insight from user-testing that led us to the idea for The Drop – that young guys are finding photos of outfits on Pinterest and Instagram that they want to wear, but don’t know how to find them or whether they can find them to fit or even within budget. Our early customers used to send us photos of outfits they wanted and ask us to make them in their size. We highlighted that many of our early users had quite specific tastes for instance “a jacket with wide lapels”. In early January, we received an order by email from someone who wanted to buy a jacket with wide lapels for his brother as a surprise and needed to know whether we could obtain his measurements from a few photos. We turned this around in about two weeks and were not so surprised to see that we had been mystery shopped by the Forward Partners team! There were a few issues around the fit, and given that our ability to determine someone’s measurements from a few photos was one of our core components of scaling the business online, Forward Partners were keen to test this further and so sent us photos of eight people working in the office to see how accurate we could be compared to taking measurements by hand. After carrying this out and refining our methods and formulae we were offered a term sheet. While the lawyers were working their way through it, Matthew carried out his reference checks on Steve and I and we did the same on Forward Partners, speaking to several of their other portfolio CEOs. We wanted to get the inside view and, more importantly, get a real understanding of how to get through the first tranche of funding and onto the next stage. Given that both of these companies had achieved this in the last two years, their insights and experiences were invaluable. Bradley: Both Martin’s suit and Nic’s jacket with MASSIVE lapels were pretty good but they weren’t enough for us not to want to do some more tests. I took pictures of a few other guys in the team and asked Jonathan to estimate the measurements from photos. The estimates ranged from perfect to ~5% out (which is too big). Jonathan came back, visibly disappointed, and suggested some basic rules (no scarves, no overhanging shirts, etc.) and that we ran the test again with some different subjects. We did so, and there was a manifest improvement. That improvement and seeing Jonathan react so positively to me giving him a bit of a hard time over this was enough to encourage me to go to the investment committee.
Keep reading to see how the venture capital deal was finally signed, sealed and delivered.
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