Understanding the Exit Landscape: What Founders Overlook About Investors
Why I’m Building PARLA Without Investors
Well, hello there.
I’ve been quiet here on Substack for the last few weeks. This four week sabbatical I’ve (unintentionally) taken from Substack was in large part due to my creative endeavors picking up.
I’ve shared before that I transitioned out of the corporate world two years ago and wanted to pursue a path more fulfilling and one where I could indulge my creativity in pursuit of my childhood dream of becoming a fashion designer. So, two years ago I left behind a decade long career, my friends, my family and everything that was familiar to move to Milan, Italy in pursuit of that dream. I drastically underestimated the work it would take to get to where I am today.
During these two years I’ve tried my fair share of alternative ways to generate an income. Dabbling in the realm of fashion and content creation but ultimately realizing my passion for helping founders was a good way to launch fractional CFO and consulting services, which then sparked the creation of The Creative CFO. This work is something I’m truly passionate about as education and providing valuable insights to founders is at the core of what I do. I deliver my work through a partnership lens; not just a service provider.
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Calling Women in Venture Capital and Private Equity
This fall, I will debut my first capsule collection of women’s suits in Milan, Italy. The event is invitation only. Please email ciao@parlaapparel.com if you would like to be included on the guest list and receive details.
Founder Update
At this point, I have invested significant time and money into creating a made-to-measure line of women’s suits, learning Italian, and navigating the bureaucracy of living abroad. Even Italians tell me how complicated their own system is. On top of that, I’ve been making friends in a new city, building professional connections, and working on positioning my personal brand as both a finance and fashion expert. I am still figuring out how to merge the two seamlessly.
The ultimate goal is to scale my brand, PARLA, and eventually launch my own venture capital firm so I can continue to invest in female founders.
These past few weeks have been a turning point. My fractional CFO work slowed as larger client contracts wrapped up for the summer, giving me the opportunity to focus almost exclusively on PARLA.
After five years, many false starts, pivots, and tens of thousands of dollars invested in consultants, prototypes, and inventory that delivered no ROI, I finally picked up my first collection. I am elated. I owe this success largely to my sartoria, a skilled artisan and high-tailor in Italy who took a chance on la ragazza americana che non parla bene italiano. What began as weekly three-hour lessons in tailoring (and a crash course in Italian) has grown into a partnership. She and her small team are now producing my capsule collections.
I’m choosing a soft launch for PARLA. I will travel to clients for private appointments in their homes or offices, followed by a more strategic launch with my network of personal stylists. What started as a creative outlet shifted after I learned more about the darker sides of the fashion industry and the precision required in high tailoring.
Raising Capital for PARLA?
People often ask what I plan to do about investors given my professional experience and network.
Not long ago, I seriously considered raising capital. I’ll admit this was partly out of desperation, as I made (yet another) withdrawal from my investment accounts to fund PARLA while still being months away from generating revenue, let alone profit.
In short, my business model does not appeal to traditional investors. Nothing about it is scalable. The value lies in craftsmanship, quality, and distribution. This is a long game to create the valuation of a luxury fashion house. The market is also saturated with clothing brands. Even with a unique value proposition, scalability is not the goal. True, sustainable luxury cannot exist in mass production. Everything in my line is customized for the individual client. Hand-finished details cannot be streamlined with machinery, which means efficiencies aren’t possible. That alone is a red flag for private equity investors.
Could I take on family and friends as investors? Yes. However, when I set up my company years ago, I created an LLC because raising capital was not part of the plan at that time. LLCs are pass-through tax entities in the U.S.. Honestly, I do not want the added burden of creating and distributing K-1s to shareholders at the end of each tax year. Could I change the legal entity type? Yes. Do I want to create that extra work for myself right now? Absolutely not. My focus is on launching PARLA and building the right sales and distribution channels; not adding more administrative hurdles.
Understanding the Exit Landscape
You need to understand the long game here. Most founders think, “I have an idea, I’ll get investors to fund it, and they’ll make their money back when we exit.”
The problem? Very few founders stop to understand what an exit actually requires; or whether it’s realistic for their business.
Here’s what investors really care about: return on investment. The only way they get that return is if someone buys their equity stake. The really big payouts come in the form of one of three ways:
Selling to a Private Equity Firm
Private equity firms specialize in certain industries and have specific criteria for deals. To even get on their radar, you need to know who the major players are in your space and what growth milestones or market share targets they expect before starting conversations.Being Acquired by a Mega Corporation
Think PepsiCo acquiring smaller brands like Poppi. These kinds of deals don’t happen overnight. They require years of traction, capital investment, and intentional positioning to even attract the attention of a global corporation.Going Public (IPO)
This path is in a league of its own. Taking a company public requires millions in upfront costs to hire underwriters, complete regulatory filings, and pitch institutional investors. And once you’re public, the scrutiny and pressure only increase.
Most importantly, each exit strategy comes with tradeoffs. If you take investor money, you are no longer building the business just for yourself or your customers. You are also building it on a timeline and structure that serves your investors’ need for a return.
Pro tip: It’s also worth noting that founders can buy out an investor’s equity stake. This is typically only feasible when it involves a minority equity holder, such as a family member or friend who came in early. Even then, there are important nuances: you’ll need to determine the company’s fair market valuation at the time of the buyout and figure out how to fund it. A buyout isn’t as simple as returning the original investment amount; it requires offering a price that reflects the company’s current value, which the investor has the right to negotiate.
Merging Finance & Fashion
So in the case of PARLA, none of the above sounded remotely appealing to me during the early stages but who knows what the future holds. My ultimate goal for PARLA is to grow the business enough to bring production in-house. I want to deliver the highest quality tailoring possible by skilled craftspeople and restore integrity and ethical work standards in the fashion industry.
The dream is for PARLA to become something like Brunello Cucinelli but focused on women’s suiting. Brunello Cucinelli is known for paying employees above market and for its ethical practices, which is rare in luxury fashion. Interestingly, Italian press often notes that he also pays his taxes on time, a signal of his integrity (and insight into Italian culture).
Reaching this level is ambitious, but I believe we are moving into an era where society craves integrity and personalization over mass-produced, low-quality goods.
My goal is not to amass wealth for myself but to invest it in other female founders. Less than 2 percent of venture capital dollars go to female-founded businesses, even though they consistently deliver higher ROI than male-founded ones.
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