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Venture Capitalists Bet on Plus-Size Fashion

Fashion industry veterans Patrick Herning and Kathryn Retzer want to bring outfits off the runway to plus-size women, a group of customers long been overlooked by top fashion houses.

Their company, 11 Honoré Inc. has raised an $8 million Series A, in the latest sign that venture capitalists are increasingly betting on this growing retail segment. Redpoint Ventures led the investment, which brings the online retailer’s fundraising total to $11.5 million to date.

Plus-size U.S. sales are growing twice as fast as the overall apparel industry, according to NPD Group, with sales up 6% to $21.4 billion in 2016.

In the last three years, Eloquii Design, Universal Standard, Gwynnie Bee and Dia&Co have raised funding from venture capitalists for plus-size fashion plays. At the same time, players ranging from Target Corp. to StitchFix, have expanded their offerings for this market.

NPD Chief Industry Adviser Marshal Cohen said plus-size fashion has been “the stepchild” in traditional brick-and-mortar retail, which often pushed aside plus-size offerings when they needed space in stores.

“It is very frustrating for the plus-size customer,” Mr. Cohen said.

He said much of the opportunity in plus-size clothing lies online, which offers a more friendly shopping environment for these consumers.

But plus-size women are gaining ground in the fashion industry. Last year, Ashley Graham became the first plus-size model to make the cover of Vogue. More plus-size models were on the runway at New York Fashion Week, with designers including Michael Kors and Christian Siriano highlighting them in their shows.

Venture capitalists say the recent publicity surrounding body diversity in the fashion industry didn’t influence their decision to invest.

“We’re trying to stay ahead of Vogue,” said Sequoia Capital Partner Alfred Lin. “Our job is always to be ahead of the curve.”

Mr. Lin led a $20 million investment in Dia&Co in 2016. He said passed on investing in Dia&Co the first time he met with the company because he didn’t understand the market opportunity at stake.

“If it was properly served, it could increase market size,” Mr. Lin said.

Dia&Co Chief Executive Nadia Boujarwah said that in the male-dominated venture industry, it was difficult to help investors understand a female consumer who “no one was thinking about.”

“It wasn’t even a traditional woman consumer,” Ms. Boujarwah said. “It was an underserved woman consumer.”

Forerunner Ventures founder Kirsten Green has invested in a number of fashion startups, including Reese Witherspoon’s Draper James and athleisure brand Outdoor Voices. Her first bet on plus-size fashion was a seed investment in 11 Honoré.

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