Beckett & Robb has been a GSD Capital portfolio company since 2012. I recently chatted with Jason Yeats, Co-Founder of Beckett & Robb to discuss fundraising and startups. I wanted to share some of his thoughts as well as his experience working with our team. First, a little bit about his company. Beckett & Robb is a men’s clothing brand dedicated to making the finest suits, shirts, shoes and accessories available to men at aggressive prices. By cutting out the middle men, designing, manufacturing, and selling products directly to the consumer they are able to make true luxury affordable to the masses. Their goal is to rid the world of the baggy suit and help men everywhere discover their own sense of style. As the business has grown they’ve expanded into additional product categories. The majority of products are made in Europe, which allows them to participate in the finest tailoring techniques and utilize the best materials on earth. They sell their products in a growing chain of company-owned stores and online.
What was your fundraising experience like prior to working with GSD Capital? Had you explored other options?
We had explored a number of other options, including traditional equity-based venture capital and angel investors. We had pitched our business to investors in Utah, New York and Silicon Valley. While we had some offers for investment from a few firms, we felt that the terms were not very fair. We were experiencing a common dilemma for young businesses. We owned the business outright and had no debt. We had bootstrapped it ourselves to a certain stage and needed more capital to really grow. We felt that there was a lot of unrealized value in our business but the potential investors couldn’t fully agree on that value at that stage and it dramatically affected the proposed equity – and consequently our dilution. At one point we had three terms sheets and we weren’t happy with any of them. That’s when we were introduced to GSD. Soon thereafter we politely turned down our other offers and moved forward with GSD.
Why did you choose Revenue-Based Financing (RBF) for your needs?
Ultimately we felt that the benefits of revenue-based financing outweighed the benefits of an equity deal. Having the payments increase or decrease with our revenue made a lot of sense to us. It doesn’t create a fixed amount of overhead and as long as we could live with the percentage like a variable expense, it works.
What have you liked most about using RBF in your business?
Beyond the comfort of being able to always afford the payments, the long-term benefits are huge. As our business has grown and the value of it has grown, the ultimate cost of the capital is proving to be far less than what the equivalent equity deal would have cost us. We’ve retained 100% ownership of our business as well as operational control, while also picking up a great strategic partner and advisor in GSD. It’s been a complete win for our company.
Other than the financial investment, what value-add has GSD Capital brought Beckett & Robb?
GSD has a lot of experience advising other businesses with similar challenges. Even if not directly in our space (which is a good thing) they have been around the block enough times to be able to help us consider things we wouldn’t have otherwise. They have contacts in numerous sectors that they’ve been able to introduce to us. They ask tough questions and push us to be better. It’s been a fantastic relationship and we’re excited to continue to work with the team at GSD for years to come.
With financing now in place, what does the future hold for Beckett & Robb?
Lots of growth. We’re investing in new physical retail stores. We’re growing our online exposure and sales channels. We’re adding several new product categories. It’s an exciting time for our brand, and we’re thrilled to see the interest we’re getting from all over the world.
In terms of startup lessons learned, what is one piece of advice for fellow entrepreneurs?
We have 2 co-founders. For the first 2 years or so it was just us. One thing we did early on that has benefited us again and again is that we drew an organizational chart of what Beckett & Robb might look like at maturity. All of the departments and roles that we imagined it would take to run a world-class organization at scale. Then we assigned every single role to one of the two of us. It created total clarity about who was responsible for what. Even though as a small business we wear many hats, and we overlap a lot, we worked to divide up the work in a strategic way, playing to our individual strengths. Today we have a team that’s growing rapidly. Each new hire represents another role that no longer directly relies on a founder. Since that time the org chart has changed as we’ve pivoted our strategy and focus. But the theory is still there. We refresh this future org chart regularly and it continues to be a source of clarity and focus for the entire organization.