We are all familiar with the rapid growth of the Chinese consumer’s buying power, as the country continues to move from its socialist past to its capitalist present and future. But as a mid-sized fund based in North America there is no way we could invest in a China based company and manage that relationship effectively.
That said, we just led a seed round in NY based Bomoda. We were joined by numerous strategic Angels, such as former Yahoo CEO Terry Semel, Ed Goodman, whose family previously owned Bergdorf Goodman, and Peter Georgescu, the Chairman emeritus of Young & Rubicam, and Joe Zawadzki, the CEO of Media Math, who also see the huge upside Bomoda could achieve.
Introduced to us by Nick Veronis, a former colleague of John Elton’s when the two were at Veronis Suhler. The CEO Brian Buchwald has recruited experienced Chinese fashion editors, product designers and engineers who had moved to NY and has taken a business model that has worked quite effectively in the US and introduced it to China. The target market is the Chinese luxury goods buyers, who do the majority of their luxury shopping while traveling the world’s fashion leading cities, Paris, Milan, London, NY & LA. The NY Times covered their enthusiasm for Fashion in a recent article, http://nyti.ms/QG2oc8
There were a few numbers that opened our eyes to how big and important economically this audience is. In 2004 Chinese shoppers bought 11% of the world’s luxury goods. By 2011 that number is estimated to be 30%. The other data point that informs us is the age of the Chinese luxury buyer. Due to the country’s more recent move to capitalism, the average consumer of high end products and services in China is 20 years younger than western countries or Japan. The years of luxury purchasing power for this audience is enormous, and capturing their loyalty today should have a very long lifetime value.
Lastly, the team Brian Buchwald has put together shows great recruiting talent on his part, and as we know so well in the venture world, it is the quality of the team that is a leading factor in businesses achieving lofty goals, as long as there is a big enough market. This market looks pretty Big to us.