Matthew Parvis’ go-to outfit almost always includes a simple black t-shirt. While in search of this wardrobe staple, he noticed a gap in the market. There weren’t quality, well-fitting, affordable options for men. It was 2015, and a “what if” conversation with his wife Melissa in their hotel room during a vacation was the genesis of Fresh Clean Threads.
The first few years saw steady growth – refining the product, launching a Shopify store, and finding an ad formula that compelled their audience. As the business gained traction, Fresh Clean Threads increased ad spend, brought on a 3PL partner, and the continued growth began to gain the attention of investors.
In 2020, the duo took outside investment from a VC firm. They invested the capital in further growth, and recruited for Marketing, Operations, and Finance roles.
CFO Tyler Mills recalls how Fresh Clean Threads used the investment to accelerate growth. “That helped us begin scaling up the business on all fronts. We got financing conditions in place so that we could keep scaling up inventory and keep investing in more advertising.”
Fresh Clean Threads reinvested heavily in marketing for new customer acquisition, while strengthening systems, processes and people across the Finance, Marketing, and Operations teams to provide a platform for long-term growth.
Tyler continued, “It was scaling up those levers in a virtuous cycle that propelled our growth – developing wonderful products and having appropriate inventory on hand to fill orders, investing heavily in advertising to acquire more new customers, and then taking the cashflow generated to invest in even more inventory and more spending on advertising, generating even more growth. And all the while, building the team internally to where we are now. That's really the story – from someone's hotel room to an institutional-scale business.”
To go all-in on growth, Fresh Clean Threads needed more financing – ideally without any further dilution. They searched for a partner who could offer them access to capital with minimal risk.
“We don’t want to sell equity if at all possible. We think our equity is very valuable, the business is growing fast, and the idea of selling equity to fund working capital is painful,” explained Tyler.
But accessing funding to help the business grow wasn’t straightforward.
The eCommerce business model was unfamiliar to many traditional lenders who were focused on standard financial health markers of a business. “Many traditional lenders had a hard time increasing their comfort with our creditworthiness as fast as we were growing the business and building financial capacity to support debt,” added Tyler.
Fresh Clean Threads was able to secure funding from a collection of supportive traditional lenders, but their growth rate was outpacing the capacity their existing financial partners seemed comfortable with. They needed to find someone who understood their business and could see the potential through the metrics.
“We needed to find a financial partner who understood the lower-risk nature of our business and the long-term value we were building from all the new customers we were acquiring who we were turning into satisfied and loyal repeat customers. And we needed a partner that was cost-effective - many of the eCommerce lenders I spoke with were charging rates that just didn’t make sense for the lower-risk nature of our business.”
“We needed to find a financial partner who understood the lower-risk nature of our business and the long-term value we were building"
Fresh Clean Threads started working with Wayflyer to support their ambitious growth plans with a structure that works for their business.
“Wayflyer really got what we were doing and has been very easy to work with. Your comfort with our business and how we make money, and willingness to develop an offering that was tailored for our needs was a real differentiator,” said Tyler.
“Wayflyer really got what we were doing and has been very easy to work with"
Working with Wayflyer enabled Fresh Clean Threads to increase investment in inventory without having to pledge assets or sell receivables. “It was the right structure for us because it was complimentary to our existing bank financing. Wayflyer was willing to be flexible and creative in designing a financing solution that worked for our business.”
Tyler recalls how they were able to order millions of dollars of additional inventory much more confidently than they had in the past.
“Being less nervous about getting in a situation where we might have to raise equity —if the business performs a little less well than we had expected— allows us to grow the business faster. That extra inventory means more delighted customers when the product they want is in stock in their size.”
Wayflyer provided access to funding within days — and this was another big value add for Tyler “There's a lot of value in not spending too much time focused on negotiating small transactions and getting on to the next thing versus being consumed with compliance reporting for your financing partners.”