Just how big is FarFetch’s latest deal?

| Beauhurst

On the 22nd June 2017, clothing marketplace FarFetch secured a colossal $397m (£311m) in equity investment from Chinese ecommerce giant JD.com.  

Constituting JD.com’s first equity investment into a UK startup, this round is the third-largest since Beauhurst’s records began, following Metro Bank(£388m) behind Improbable ($502m/£389m). Indeed, FarFetch has now raised the second-largest amount of equity investment ever seen by Beauhurst: £516m to Metro Bank’s £637m.

Because FarFetch UK is a subsidiary of its US parent company, and thus does not file its deals with Companies House, it is not possible to calculate a precise valuation for this round or the company’s previous raises.

It is, however, interesting to consider how FarFetch’s raise compares in size to those of other young high-growth companies in the sector.

Within fashion and ecommerce, the average investment size (not including FarFetch’s latest raise, which would almost double the figure) is £2.75m. The average stake taken is 21%, and the average company valuation is £3.2m premoney – in stark contrast to FarFetch’s own valuation, which is purportedly over $1bn.

There’s also a not inconsiderable rate of death in the sector: up to the end of Q1 this year, 16% of all equity-backed companies have so far gone on to fail, compared to 4% which have ended up exiting. These figures are the opposite to those we’re used to seeing across sectors: evidently, fashion is a risky business.

Deal numbers into fashion and ecommerce companies since 2010

As the above graph shows, deals in the fashion ecommerce sector have fallen since their peak (28 annually) in Q1 2015, although the amounts on offer have steadily grown. FarFetch’s latest raise has certainly ensured that 2017 will go down as one of the most significant, if not the most significant, years for high-growth fashion in the UK.

The most prolific investor in the sector so far is Crowdcube (5 deals) followed by SeedrsAdvent Technology, and Index Ventures on 4 deals apiece.