103 200 € (103%)
of 100 000 - 300 000 € goal funded
200 € minimum investment
Offer update for Alpaka investors 7-30-2018:
Investors who are investing over €8 000 get a discounted valuation €1600000.
ALPAKA is an Estonian brand creating luxury clothing and interior textile accessories, made from the wool and fur of the Peruvian alpaca. Our products are ﬁltered through distinctly Nordic design sensibility to bring you timeless luxury and enduring style. Our headquarters are located in Tallinn, Estonia, while our exquisitely crafted goods are produced in Peru and ﬁnished in Estonia.
Our products are available in over 30 of the world’s most fashionable destinations. Main export markets being Germany, Japan, UK, France and Netherlands. We also sell to USA, Russia and Middle-East, our total export is more than 60% of our sales. We are regular attendees at trade shows in Paris, New York, Cologne, and more, while our retail partners represent a selection of the ﬁnest boutiques and fashion stores in the world. We sell mostly through resellers, but our aim is to focus also to B2C market to obtain higher margins. ALPAKA as a trademark has been registered in the EU, USA, Canada and Japan.
Problem & Solution
Fashion and interior markets are witnessing a growing trend that price is not the main criteria for purchase. There is a growing number of people who are tired of one-season products and appreciate also impeccable quality, uniqueness and environment-friendliness. This trend is especially evident in our target markets in Europe and Japan, where customers value natural ﬁbers, authenticity and consider what is the impact on health and environment.
ALPAKA products are made of the best natural ﬁber in the world - alpaca. Alpaca ﬁber is like the perfect material breeded for human needs: it is 7 times warmer than sheep wool, soft as cashmere, durable, dirt-repellent and also allergy free and environment-friendly. Our products combine this treasured ﬁber with Nordic style and highest quality.
ALPAKA's product line stretches from interior to fashion items. Interior items include throws, rugs, cushion covers and bedcovers. Fashion items include scarves, hats, sweaters, dresses and ponchos. All products consist of alpaca wool or fur.
From alpaca fur we produce mostly interior items: rugs, bed and cushion covers, and also gift items such as teddy bears. The pelts are tanned in Peru in our production unit. Our fur production is sustainable as the animals are not killed to obtain their fur. Only pelts from animals that have died a natural death are used, meaning we are using a material that might otherwise have been wasted.
From alpaca wool, we produce interior and fashion items. We source the wool ourselves and subcontract the knitting and weaving service according to our in-house designs.
Products are targeted at mid/high-income customers who appreciate quality, natural materials, unique design and also alpaca ﬁber and its exceptional characteristics.
Currently we sell mostly via resellers who represent department stores, boutiques and interior designers. All our products are designed in Estonia by our designer Anni Ilves. We produce mostly in Peru, only fur items are ﬁnished and made into end products in Estonia. Production of wool items is subcontracted, fur items are produced in our own factory in Peru, which is owned by one of Decoreters owners Kristjan Sillaots. Production processes such as tanning, colouring and sewing of fur items are done in Peru.
Our company's sales in 2017 was over 700,000 euros. We plan to increase the sales considerably through the following activities: - increase direct sales to end customers, both volume and proportion to total sales - increase reseller network - increase product line
There are 3.5-4 million alpacas in the world, of whom about 90% live in Peru. The annual Peruvian alpaca ﬁber production is ca 4,500 tons, of which 60% is for export. As it is very rare material, there is almost no reliable statistics on the use and sales of alpaca ﬁber. We have estimated that the annual retail market for alpaca products is ca 1 billion euros, out of which an estimated 200mEUR comprises mid/high-end segment. We aim to grab 2-3% out of this segment, that is 4-6 mEUR.
Traction & Accomplishments
We have been operating for 10 years, of which last 6-7 more actively. We started as a hobby business and now we are planning to grow at a quicker pace with extra funding. We sell to 30 countries in the world, in year 2017 annual sales was 702,000 euros, of which 63% was export. We sell to department stores, boutiques, and also supply interior design projects in luxury yachts, private jets, luxury apartments, hotels.
We aim to grow fourfold in the following 6 years. We see it as a realistic goal, if we would have the necessary ﬁnancial backing. This belief is backed by orders from regular customers and also start of cooperation with new customers with great potential in 2017 and 2018.
In 2014, Decoreter OÜ was nominated Innovator of the Year in the biggest Estonian entrepreneurship competition TOP Estonian Enterprises.
How We’re Different
Our main competitors are European and American brands who oﬀer similar products and are active on the same markets. We compete indirectly with other high-end brands, who use other natural ﬁbers, and directly with other brands specializing in alpaca.
Our advantages are well-established sourcing channels, our own fur tannery and production in Peru, sales agents' network and extensive resellers base. Of course also ability to use Nordic design with Peruvian traditional weaving and knitting techniques and traditions.
Uses of Funds & Timeline
We are raising to ﬁnance the growth of our company and to improve our capital structure. We plan to grow mainly by developing our online-channels in target markets, launching online marketing campaigns, hiring sales and marketing people, widening our product collections and by more active sales activities.
Our aim is to open German, Japanese and Estonian webshops in summer 2018. In the following years, we plan to add other localized online shops. We plan to participate in 3 more foreign trade shows in 2018 and in 6 trade shows in 2019 - in Germany, USA, Japan and France
Obligations to Investors, Profit Distribution
Our main goal is to grow the company up to 4 times in the next 6 years.
1) As we operate in high margin market, we expect to start paying dividends in 2021, when the annual net proﬁt exceeds 100,000 euros. We have planned to pay out dividends of minimum 50% of net proﬁt earned.
2) The company's value is expected to increase according with the sales growth and we are also open and looking for exit options like the sale of shares to a bigger fashion and/or lifestyle brand in 5-year perspective.
3) Investors will be awarded with gifts in addition to shareholding and future proﬁt-sharing if single investments exceed the following amounts:
• All investors will get a minimum of -10% discount from all products while being a shareholder.
• 600 - 999 euros investmet. -15% discount from all products while being a shareholder.
• 1,000 - 1,999 euros investment. -15% discount from all products while being a shareholder and ALPAKA scarf in value of 94 euros.
• 2,000- 2,999 euros investment. -20% discount from all products while being a shareholder and ALPAKA scarf in value of 156 euros.
• 3,000 - 9,999 euros investment. -20% discount from all products while being a shareholder and ALPAKA throw in value of 238 euros.
• 10,000 - 24,999 euros investment. -25% discount from all products while being a shareholder and ALPAKA products in value of 500 euros, can be chosen freely.
• From 25,000 euros investment. -25% discount from all products while being a shareholder and ALPAKA products in value of 1,000 euros, can be chosen freely. Plus a special bonus trip to Peru with anthropologist and radio presenter Ivo Tšetõrkin from Amazonas Reisid.
Risks and Mitigation
1) Financial risks
a) Insuﬃcient liquidity and lack of working capital. This limits production and fulﬁlment of customer orders. To reduce this risk, we plan to raise extra capital, to have a buﬀer in working capital. We also have received indicative oﬀers from banks regarding possible extra loan capital.
b) Foreign exchange risks
Since we buy products from Peru, the main transaction currency is US dollar. With dollar getting more expensive, the buying-in prices will rise. During our operating years, we have experienced both 10% higher and 10% lower exchange rates. As foreign exchange risk realizes, we might need to correct our selling prices.
2) Overstocking of products that do not sell well, that slows our turnover.
To reduce this risk, we choose our product line carefully, plan production well ahead and sell unpopular products with discounts. However, most of our products do not age as they are not perishable goods.
3) Growing demand for the material, so it would become scarce and even more diﬃcult to get and that would increase raw material prices.
We have well-established sourcing channels with whom we have long-term cooperation relations.
4) Overinvesting in marketing activities that do not have the desired result. We invest heavily in growth, especially in marketing via trade shows in Europe, USA and Japan. We would be proﬁtable already now, if we did not focus on growth. If necessary, we can optimise our activities and decrease investments into growth.
5) Credit risk
Some clients ask for longer payment periods and their payment behaviour can be unsatisfactory. We choose clients carefully and insure the invoices of those clients who ask for long payment terms.