Deal Dive: It's time for VCs to break away from fast fashion

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Fast fashion is an industry It is mired in labor issues and copyright problems, and has a high environmental impact due to its waste water and carbon emissions. It also has the potential to earn a lot of money fast.

But despite all these issues, VCs will not stop loving this sector.

On Wednesday, my colleague Manish Singh wrote a scoop about a potential Excel investment in Numi, a fast-fashion startup based in India. Numi is an app-based retailer that produces 500 new items per week at an average price of $10. This news comes just a week after the company closed its seed round.

Excel and Numi did not respond to requests for comment.

Numi looks a lot like many other VC-backed fast-fashion startups like Shein, which has raised $4 billion, and Cider, an Andreessen Horowitz-backed startup valued at $1 billion. Cider says its on-demand inventory makes it a more ethical fast-fashion alternative. However, this is a matter of debate.

Accel's potential investment in Numi stood out to me for a few reasons, the biggest of which is that I'm not really sure why VCs back these companies.

Fast-fashion companies quickly gained popularity and a large following due to their ability to get clothes from the runway to your local department store in record time. But the fact is that often, they can produce clothes so quickly only by cutting corners. The only way to implement this strategy is to use cheap materials and cheap – and possibly low-paid – labor, and in many cases, copy the designs.