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

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Fast fashion is an industry It is embroiled in labor issues and copyright issues, and has an enormous environmental impact due to its wastewater and carbon emissions. It has the potential to make money very fast.

But despite all these problems, VCs have not stopped loving the sector.

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

Accel and Newme did not respond to requests for comment.

Neum looks like many other VC-backed fast-fashion startups, such as Sheen, which raised $4 billion, and Cider, an Andreessen Horowitz-backed startup valued at $1 billion. Sider says this makes on-demand inventory a more ethical fast-fashion option. But that is up for debate.

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

Fast-fashion companies have gained rapid popularity and large followings due to their ability to bring clothing from the runway to your local department store in record time. But the fact is, often, they can only get undressed quickly by cutting corners. The only way this strategy could work was to use cheap materials and cheap — and low-paid — labor and, in many cases, copy designs.

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