3 questions for . . . Frédéric Biousse, CEO, Experienced Capital Partners
His passion is affordable luxury. It’s also meeting challenges and creating healthy brand development. Ecole Centrale graduate Frédéric Biousse is known for contributing to the Comptoir des Cotonniers success. And during that project he met Elie Kouby, the man who became his permanent business partner. Together they built the SMCP (Sandro, Maje, Claudie Pierlot) empire before selling 65 percent to the American KKR & Co. equity firm in 2013. In March SMCP was sold to Chinese investors. Frédéric Biousse, with Elie Kouby and Emmanuel Pradère went on to create ECP (Experienced Capital Partners) Investment Funds. The directors consider ECP to be not just a financial entity, but also an organisation combining consulting services and expertise.
Why did you decide to start an investment fund targeting several sectors, especially fashion? What are your objectives?
Elie Kouby and I had thought about this idea ever since we first met. When we sold SMCP to KKR in 2013, we told them right away that we would stay with the group for only three or four years. The structure had become too big, with around 30 subsidiaries. We spent our time going from meeting to meeting and no longer enjoyed day-to-day management tasks or being in the field. So we went back to our interest in creating an incubator for new businesses. After our experiences with Comptoir des Cotonniers and then with Sandro, Maje, and Claudie Pierlot, we had seen that we’d always be facing the same challenges.
When my departure from SMCP was announced, I had offers from luxury groups and investment funds to develop affordable luxury brands. Finally, with Elie Kouby and Emmanuel Pradère (former second in command at SMCP) we decided we wanted to create our own investment fund. With that project, we wanted to assist young businesses and show them that it’s easy to accelerate growth when you understand how the sector works. It’s the same process for everybody to reach each stage of development. In our past we had made so many decisions over so many years. Of course we made mistakes, but that helped us move forward and those experiences are still helpful to us. We especially wanted to help young managers make the right decisions. Our goal is to help around 10 affordable luxury brands in fashion, cosmetics, food, and even technology and education.
With each project we are clearly minority investors with a minimum of 40 percent in the business.
We’ll announce a new acquisition of shares in May.
What are today’s criteria for investing in a fashion brand?
There are four main criteria. The product has to be very good, well positioned, original, easy to understand, and with good value for money. Next comes retail. The concept should have been tested in a first boutique and an online boutique. When consumers discover the boutique, they have to immediately understand the brand universe. Americans call that “proof of concept”. Elie Kouby and I opened a total of over 2,000 points of sale for the brands we managed. In five minutes we know if the concept will work; it’s obvious right away.
Next comes the critical role of the manager, who must be ambitious, have a good outlook, and want to do business. The manager has to have an ego, but one that’s under control. And finally, the concept has to make sense to us and we have to be proud to work for the brand and product and with the manager.
What do you think about French ready-to-wear? In general what are young brands’ strengths and weaknesses?
Brands like Zadig & Voltaire, Sandro, Kooples, and Ba&sh created a specific business model. It takes real expertise to develop concepts for brands that are profitable and have an attractive image that department stores and banks pay attention to and follow. In the very beginning of Comptoir des Cotonniers and Sandro, nobody wanted to finance us. Today, financing by banks has become easier and is available to the entire sector. But we don’t think it’s possible now to create this kind of model with such an extended retail network. Creating 200 point of sales in France can no longer be accomplished by one brand alone. Today such a vast network could only be maintained by three brands. Clients want a more exclusive availability. We also think that young brands are making a mistake by focusing on wholesale. As soon as there’s a problem somewhere, you’re no longer in stores. So it’s important to have your own retail network. Being “at home” in your own boutiques creates value for brands. It’s also crucial to target China.
Overall, young entrepreneurs too often think that they can function alone over the long term. In our case, we were always at least three, which meant we made better progress. I find it very interesting to observe the number of entrepreneurs appearing today. But I don’t think investments funds are helping them by just giving them money. The money is spent in two years, and then what happens when it’s gone? The real challenge is to share experience with entrepreneurs. That’s what’s happening with Balibaris, the first brand we invested in. The manager was satisfied with the operational experience we brought. We were especially helpful in creating a team – recruitment is key. Balibaris’ turnover will go from €2.8 million last year to €10 million this year, and there’s still a lot of room for growth. We’re targeting €25 million as early as next year.