The Faction Collective, a ski brand formed in 2006, landed a $3 million investment from Octopus Investments.
Faction skis has been gaining publicity since early 2012, when the company signed X Games champion, Candide Thovex, and the company says sales are increasing.
Now, with a $3 million investment, Faction aims to build a larger management team and widen its freeskiing influence.
Skiing Business caught up with Alex Hoyle, Faction’s co-founder, to get more on the story.
How long, specifically, were you working on raising the money? Was getting the investment a difficult process?
From the initial launch to our final agreed terms it took about 90 days. The investors have been particularly receptive to the substantial global traction that we have been building, which always makes fundraising easier. Meanwhile, our position in a growing market with unique design and technology has resonated very well with investors.
How has the investment scene changed for you guys over the years? Why raise money now?
In the initial phase, the cash came just from us founders.
The round we raised in 2010 was very much about an opportunity and a promise.
This round was much more clearly based on results-to-date, trajectory, real market needs, and the opportunity not to create just another niche brand, but a substantial brand that riders will love.
What, specifically, will the money be used for?
We’ll be expanding our management team, increasing R&D in more new materials like our Superlite series, and really amping up our marketing to get the word out to freeskiers everywhere. We’ve been expanding very rapidly in the USA, France and Scandinavia and will keep that rhythm up.
You mention that you’re expanding rapidly including in the U.S. Why do you think that is?
Europe is known for quality skis, but freeskiing was pioneered in the U.S. It seems kind of natural to see the resonance of a quality European brand in the North American market where freeskiing has grown 46 percent in the past two years.
Based on current projections, how long will the money last?
We could run the business with this round and make it work, but, if we do, we will leave growth untapped. Accordingly, the team will decide on how much to advance product expansion, R&D, and how to get the word out and define future fundraising to match it.
With so many tech-oriented investors, what did it take to sell your business story and successfully raise money?
Tech entrepreneurs and investors see a changing market with slow-moving, major incumbents and recognize the opportunity for disruption. The ski industry was a stable place for generations. However, in the past decade, we have seen consumers taking a powerful pull approach to their buying rather than the push of whatever the majors put on the shelves.
People expect their product to actually improve year-over-year, and, while the majors did so slowly, it was often only cosmetic. It was nowhere near the pace that snowboarding did. Further, everything from supply chains to consumer engagement is changing, and this has impacted incumbents like the French majors that have all had to completely reboot their businesses. I think a classic investor still looks at a market dominated by a few brands and does not see the upcoming brands, which cause a disruption, that a technology investor like ours does. Technology investors are accustomed to living that kind of product and brand change. We also focus on scalable value of the brand instead of several funds and angles that are technology-specific used by other brands. We think this resonates well.
What advice do you have for other ski-industry brands looking to raise money?
There is plenty of room to take market share from the majors who still dominate more than 90 percent of the industry. I would say there will be a differentiation between great niche brands that will bring pleasure to riders and owners alike, and those that will grow to take a place as a significant part of the market. What is important for brands raising funds will be to decide where they will play in that continuum. They need to find investors who are aligned with the brand’s particular goal, and show they are well positioned to achieve it through. Some brands that pioneered freeskiing built the market, but will not necessarily scale. We Iove those brands. Some are high end, others high spirit. At Faction, every day we work to bring that spirit, look, design and ethos to life, but we have taken measures to build a sustainable and lasting business to bring great products to riders well into the future. It’s exciting.