First Stage Investor

A Second Chance to Invest in a Now $130 Billion Disruptor

A Second Chance to Invest in a Now $130 Billion Disruptor
By Andy Gordon
Date September 14, 2017

The September issue of First Stage Investor hit your inbox last Friday.

I hope you’ve already dipped into it. If you haven’t, you’re missing out on seeing me do something I’ve never done before…

Double down on a startup recommendation.

To tell you the truth, it wasn’t that hard of a decision.

We’ve had plenty of opportunities to do this. But they just weren’t compelling enough.

To double down on an investment, it has to be pretty special. This one more than meets our high standards.

We believe DSTLD is a very special startup.

We first recommended it last August. Its first product was what I call “three-in-one” jeans: fashion, quality and affordability… all rolled into one extraordinary pair of denims.

Okay, you’re probably wondering why I’m so excited about a company that makes jeans… Let me explain.

Since last August (when we first recommended it), DSTLD has exceeded our expectations in several key areas: sales, customer growth, cost efficiency, profit margin expansion, product line additions and supply line management.

So, here’s the deal. With a $22 million valuation a year ago, DSTLD was a good investment.

Now that it has a $30 million valuation, we think it’s an even better one.

DSTLD was able to significantly reduce risk to growth, business strategy and profit margin in just a year’s time – a major achievement that more than justifies its increase in valuation.

The company has made progress in three particularly crucial ways:

  1. It’s selling more expensive items.
  2. It’s lowering expenses.
  3. It’s improving customer acquisition costs.

So why a second Regulation A+ round?

DSTLD’s first Reg. A+ raise garnered $1.7 million. DSTLD used it to make key hires in marketing and other departments.

Its staff grew from eight to 14 over the past year.

In this second Reg. A+ round, the company aims to raise $200,000 to $10 million.

It will allocate half of that to online marketing.

The next $50,000 will go toward hiring marketing and customer service personnel, and another $50,000 will be used to expand products.

If DSTLD raises more than the minimum of $200,000, it will use any additional funds as follows:

  • 20% for product buys
  • 15% for personnel costs
  • 55% for advertising
  • 10% for capital expenses.

Based on that breakdown, the company is set to make a big push in online marketing and advertising that should accelerate its revenue growth.

I like our timing for this recommendation.

We know a lot more about the company now, and DSTLD’s outstanding progress has made it easy for us to participate in its second Reg. A+ raise.

This is a fantastic opportunity if you missed out on DSTLD’s first raise… and a fantastic opportunity if you’re new to First Stage Investor, as you get a chance to invest in one of our original portfolio holdings.

But if you did invest the first time around, I strongly suggest you do it again. As I said, its current raise is an even better deal.

To get started, check out my full evaluation of DSTLD in the September issue of First Stage Investor.

Good investing,

Andy Gordon

Co-Founder, First Stage Investor

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