Case study: scaling back to survive

Fashion and beauty marketplace Scoon planned to fundraise in 2020 – instead, it had to scale back and reallocate funds to last.
Scoon 16x9 hero

Founded by beauty-and-fashion-world alumni Guusje Wentrup and Marloes Garben, Amsterdam-based Scoon is an online marketplace for sustainable fashion and clean beauty products. In 2019 – its first year – it focused on audience testing and its marketing mix, clarifying its target audience. The intention was to aggressively market the company in February and March 2020, and fundraise later in the year.

‘When Covid-19 hit, our world was turned upside down,’ explains Guusje. They knew they had to invest heavily to reach their KPIs and attract investors. However, investment meetings were cancelled. Without investment, Scoon would burn through funds too quickly. ‘We scaled back. We decided to bring our burn rate down to see if we could stretch the lifespan of the company,’ Guusje adds.

Cut, cut, cut

Marketing was the first expense to go – all advertising activity ceased. Then, Scoon downsized content creation. Tech development was reduced with only key enhancements to the user-end of the marketplace going ahead. Luckily, Scoon operates on a drop-shipping model – they scrapped the office lease and the team worked remotely from home.

A lifeboat loan

Minimising expenses wasn’t going to be enough. The knock-on effect of Scoon’s low burn rate meant it had few interesting KPIs – meaning its fundraising opportunities would be limited. In response, Scoon successfully applied for the Dutch government’s Corona Bridging Loan for startups to maintain momentum.

Repurposing funds and focus

Scoon sank the grant money into what was working well, hiring a social media expert to take advantage of low advertising rates and capture its target audience. It yielded a positive impact on click-through and conversion rates. ‘In March, there was nothing. In April, we started slowly investing and you see some traction... as soon as we had that grant we were able to invest heavily in May, June, July... every month was getting better,’ says Guusje. The tactic has provided Scoon with strong community and customer insights – which have developed into a long-term focus. Its stakeholder partnerships have strengthened also – and left them with the numbers to help convince investors.

This article was first published in Courier issue 37, October/November 2020. To purchase the issue or become a subscriber, head to our webshop.

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