Gaorong Capital Backs Apparel Software Company Linctex 
COVID-19 and China
Leveraging the power of software. Image Credit: Jazmin Quaynor

Gaorong Capital, along with Shunwei Capital and Baidu Ventures, among others, has invested CNY 100 million (USD 14 million) in Linctex, a software company that enables fashion practitioners to design, work and deliver in a better way. 

Founded in 2015, the company targets small and medium enterprises (SMEs) in China’s garment industry. It combines features of product lifecycle management (PLM), fabric marketplace and 3D garment sampling solutions. The deal followed Smart Fabric’s completion of a USD 100 million Series C and Baibu’s USD 300 million Series D in 2019, representing an accelerating pace of transformation in China’s apparel industry. 

The number of software solutions in the niche is enormous. For instance, AIMS360 Fashion ERP, ApparelMagic and Sync are all well-performing industry tools overseas. 

Linctex, a SaaS-enabled marketplace business, generates revenue two ways – a software licensing fee and a marketplace fee. 

Specifically, Style 3D aims to digitize the enterprise style for faster product development. It offers a one-size-fits-all version to all enterprises and charges from one thousand yuan (USD 140) to tens of thousands of yuan annually. Linctex’s founder Liu Chen claimed the price is equal to making several physical samples. It might look like a good enough choice for SMEs to buy into – but there is more to the offer than this factor.  

First, the garment industry is highly fragmented. Millions of small designers, wholesalers, manufacturers and retailers are searching for their suppliers/buyers frequently. In such a case, the marketplace can capture the ongoing value between the buyer and seller through transaction fees alone. The system helps designers and pattern makers share results to the clients or team, decreasing the development life cycle from 30 days to 3 days, according to the firm’s website.

On the other hand, Chinese garment enterprises are still at a superficial level of software adoption awareness, who are lack of paying incentives.

As such, Linctex drives its business on the marketplaces it builds; transaction fees contribute a large part to the company’s sales, which are valued at CNY 200 million (USD 28 million). 

The apparel industry in China is suffering as the novel coronavirus outbreak hits the country. During the first week after the extended Spring Festival declared by Beijing to hinder the spread of the disease, the company received overseas requests ten times greater than regular levels. Besides, domestic firms have started to utilize online collaborative tools to meet the needs of working remotely. For vertical SEM Linctex, it is high time to grasp the chance, expand fast and build its mindshare among its customer base. 

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