In this case, the management team of Athleta wanted to raise money for its growth plans. There are three choices: venture capital; angel investors; and commercial banks. In my opinion, the company should first turn to commercial banks, negotiating credit lines with one or several different commercial banks in order to finance the company’s growing inventory. It could buy them enough time to raise the Series E from other sources; then, they should improve its business model and plan to attract VC companies. Although it’s a hard time for retail companies to find VC, Athleta’s business model is kind of attractive and VC companies are open to any good opportunities; the last option is angel investors, because the investors also wants to be “partners” and not just “investors”. From the history of this company, we can see that Kerslake invested much time and energy to form the management team who shared the same value of this company, and I suppose the management team means a lot to Athleta and they don’t want to add new partners who don’t share the same value just because of money. From the long run and value perspective, my suggestion is that angel investors is the last option they should consider.
First, from Table A and numbers ($25billion in 2000, estimated $96billion in future) in the article, we can see the big opportunity in women’s sports apparel market, and Athleta acquired the market as a beginner very successfully, and we can see how its revenue grew in table B. In exhibit 4, the projection of its revenue growth is very attractive. We can see the net income growth projection is very promising. The business plan to achieve this projection goal is very important to VC companies.
Second, the business model, including aspects of channel strategy, product, target customers and brand can be attractive to VC companies. It should distinguish itself from regular retail businesses. The biggest advantage of Athleta is that it first recognized the good opportunity of women apparel market and acquired big market shares as beginners, and gained a lot of recognition. Then it should expand its channel through good recognition from customers, while further enhancing its good reputation of brand. In terms of channel strategy, Athleta should pay more attention to its online channel and plan to launch “brick and mortar” retail stores. As Athleta’s target customers were women between the age of 18 and 50 with a college education and average household income greater than $80,000, most of these target customers would shop online. Also, the retail stores can enable Athleta to approach other types of customers and increase its brand awareness.
Thirdly, using its growing plan, from Table C, we know that the estimated capital from the company was roughly $3.62 million. The capital needing to increase the annual circulation from 6.5M to 20M in 4 years was about $1.5 million.