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Luxury brands acquire start-ups to smarten up and future-proof fashion

Luxury brands go hi-tech by acquiring start-ups

Start-ups are a symbol of innovation and creativity. The luxury landscape is changing because of technological advances and the success of start-ups. Many luxury brands are recognising the innovation of start-ups and even acquiring them for their technology and for future growth.

The watch industry, for example, is split between watchmakers focused on carefully manufactured timepieces and the new wave of watchmakers that are embracing tech-enabled smartwatches. Brands such as Montblanc have started coming out with smartwatches to complement their mechanical models, but they are largely in the minority. In the meantime, younger brands are offering the latest in wearable tech to woo modern consumers.
The wearableBiowatch bracelet transforms your watch into a secure source of identification based on the unique pattern of your veins.

The Biowatch bracelet transforms your watch into a secure source of identification based on the unique pattern of your veins. The bracelet sends out authentication signals when the user is wearing it. CEO and co-founder Matthias Vanoni says that vein authentication is created the first time you wear the bracelet – the initialisation process takes only a few seconds. “You will no longer have to unlock your computer with fingerprints, type your password on your cell phone, or use electronic ID cards for e-banking,” Vanoni says.

A few banks and carmakers are testing the Biowatch bracelet. Far more advanced in its financing, Biowatch closed a first round of funding at 1.2 million Swiss francs (HK$9.8 million), in addition to a previous investment of 800,000 Swiss francs from Swiss government funds.

The watch industry isn’t the only one rising to the challenge. The wine industry is in good shape and global demand is rising every year. But despite a history as old as civilisation, even this traditional space is open to technological innovation. Enter Optiwine.

French start-up Optiwine came up with a solution for the decanting process – pocket decanters using the firm’s patented nano-aeration technology.

A French start-up, Optiwine recognised a struggle that every wine aficionado faces: the decanting process. Decanting can improve the taste of the wine, but it can also ruin a precious wine.

To solve this problem, Optiwine developed a stylish pocket decanter using its patented process of nano-aeration. Founders Olivier Caste and Michael Paetzold say that aromatic molecules in wine have a short oxygen lifespan. “Oxygen needs to be brought into the wine gently, and nano-aeration brings out the best in a wine and retains all its aromatic qualities,” they say.

Optiwine CEO Olivier Caste.

Entrepreneurs such as Optiwine do not need to rely on venture capitalist funds or private equity funds. Optiwine is growing by word of mouth, with vineyard partners, master sommeliers and retailers around the globe.

You will no longer have to unlock your computer with fingerprints, type your password on your cell phone, or use electronic ID cards for e-banking
Matthias Vanoni

Innovation is equally important in the accessories industry. The Hermès Birkin is the most iconic luxury bag. Its hardware is plated with precious metals such as gold or the very rare palladium. There might be an alternative solution as physics expert Cyrile Deranlot, founder of start-up Daumet, discovered a new white gold.

“We created a new white gold alloy from tungsten,” Deranlot says. “The problem with white gold is that its brightness diminishes over time. Our white gold is bright, sustainable and, above all, timeless.”

Deranlot is already talking to jewellery houses and luxury watch groups in Europe. He will be travelling to China to find a business partner since the nation is the world largest tungsten producer.

Start-up Daumet created a new white gold alloy from tungsten. Its white gold is bright, sustainable and timeless.

And the fashion world is certainly paying attention to what bright young minds have to offer.

On June 15, speaking at the Viva Tech conference in Paris, French President Emmanuel Macron pledged that his government would create a new “tech visa” to attract international talent to work in the country. He also announced a 10 billion euros (HK$93 billion) funding to foster tech innovation. Macron said the measures were aimed at creating world-leading companies.

The goal of the three-day conference was to celebrate innovation among tech-lovers, entrepreneurs, investors and pioneers of the future, along with leading tech companies such as Facebook, Google, IBM Watson, and, surprisingly, LVMH.

Daumet gold marquetry.

The world’s leading luxury group, LVMH launched the first “LVMH Innovation Award” this year to stimulate bright ideas and innovation. The group selected a line-up of 32 start-ups from among 500 candidates to meet with a panel of experts from LVMH maisons, other start-ups and venture capital firms at the Viva Tech conference.

The first LVMH Innovation Award went to start-up Heuritech. The award presentation took place during the Viva Tech conference.

Start-up Heuritech, which offers an AI-powered virtual assistant capable of spotting the latest fashion trends, won the award. The first customer and early partner of Heuritech was the French luxury house, Louis Vuitton.

LVMH’s move towards innovation and technology may come as a surprise to some, but is hardly unexpected. The luxury industry is the perfect example of where art and business collide – and it’s constantly evolving.

Heuritech offers an AI-powered virtual assistant capable of spotting the latest fashion trends.

The volatility of trends, the fluctuation of currencies, and the complexity of different markets have a strong impact on investment decisions and the associated risks. Fashion companies and luxury groups have had an increased interest in start-up acquisitions in the hope of achieving rapid growth.

A great example of a thriving fashion start-up is Farfetch. Created in 2007, this online marketplace is in the exclusive club of so-called “unicorns” – start-ups that are valued at US$1 billion or more. Farfetch was an early adopter of online sales in the fashion industry and might be on course for an IPO that could raise its value up to US$5 billion.
By comparison, the prestigious British fashion house, Burberry, founded in 1856, was valued at US$5.3 billion by Interbrand in 2016.
Optiwine is growing by word of mouth, with vineyard partners, master sommeliers and retailers around the globe.

LVMH seems to understand what they’re up against if they want to continue to lead. The group recently appointed Ian Rogers as its chief digital officer. Rogers is not your typical LVMH executive in a corporate black suit. The 45-year-old American businessman is the former CEO of Beats Music as well as a former Apple Music executive. He knows the importance of technology and that a business runs on a stack of software.

During his closing speech at Viva Tech, Bernard Arnault, chairman and CEO of LVMH, revealed his management philosophy. “LVMH is a large group. Today, believe it or not, we are number one in the French market. As an international start-up, it’s very small. I am used to saying to my team, ‘We are still very small, we are still like a start-up’.”

 

Fashion

Start-ups like Biowatch and Optiwine are adding new horizons in the luxury world