The $79 Billion Sneakers (or “sneakers”, to our readers in the UK) the industry has spawned a lucrative resale market, expected to reach $30 billion by the end of the decade — up from $5 billion by 2020. Some have even called sneakers an alternative asset class, an investable product that can be bought and resold for a high price – especially for sneakers that are limited edition or otherwise hard to get.
Add to that the prevalence of counterfeit sneakers, with some reports indicating that the counterfeit shoe industry is quintupling the legitimate market by a whopping $450 billion, and it’s easy to see why there could be value in technology platforms designed to give sneakerheads peace of mind when saying goodbye to their hard-earned money.
This is precisely why established marketplaces have invested in authentication services that span luxury goods of all kinds, such as eBay which acquired Sneaker Con Digital’s sneaker authentication business in 2021.
It’s against that backdrop that British startup Laced stepped into the fray five years ago, serving as a centralized platform for buyers and sellers to trade premium sneakers with the knowledge that all is well. The company announced today that it has raised $12 million in a Series A funding round, on top of the $1 million pre-seed round it raised some three years ago.
How it works
Founded in London in 2018, Laced facilitates the sale of sneakers between sellers and buyers. Now, sellers can be individuals who want to sell hard-to-find sneakers for a profit after purchasing from the original brand, or they can be professional sellers dedicated to finding desirable footwear on a large scale.
Laced home page Image credits: Tied
The seller sets a price, with no eBay-like auction element available, and the shoes are then placed in a queue that is prioritized based on the lowest price first — this, according to Laced chief of staff Gareth Olyott, is designed to encourage sellers to to offer their goods at a reasonable price.
“To get to the front of the line and have the best chance of selling your item, the price has to be the lowest,” Olvott told Acutely.info. “This discourages sellers from offering items at astronomically high prices compared to their value.”
There’s no escaping the similarities here with something like secondary ticket marketplaces, where touts (aided perhaps by bots) scoop up all the tickets for a concert at a primary outlet and immediately sell them on “legitimate” secondary marketplaces for a hefty sum. gain.
The arguments for this model is also very similar in that having a properly authenticated, legitimate company managing the resale process ensures buyers don’t have to deal with dubious sellers.
“Footwear accounts for 20 percent of the value of all counterfeit goods, and the counterfeit sneaker market is estimated to be worth five times the legitimate market,” Olvott continued. “This shows that the proliferation of counterfeit goods in this sector is a huge problem for collectors and enthusiasts alike. Laced takes the risk out of buying an item from an unregulated marketplace, and that it arrives and is not authentic.
All trainers must be new and in their original packaging, and after each completed transaction, the seller ships their goods to Laced, which uses internal authenticators to verify their veracity and forwards them to the buyer, with a 15% discount on top of the list price .
And unlike something like eBay, buyers and sellers on Laced remain completely anonymous – both to the public and to each other.
“Laced acts purely as an intermediary in the relationship between the buyer and the seller,” Olyott said. “We exist not only to ensure the quality and authentication of the items, but also to keep everyone involved anonymous and safe. We believe that anonymity, at least for the customer, keeps things more streamlined and simple. Especially when it comes to high-quality and highly sought-after items.”
Laced is aimed exclusively at the UK, which sets it apart from many of its counterparts, while also claiming to have a unique authentication process, though it hasn’t had complete discretion to say exactly what this is.
“We are of course limited to how much we can disclose for fear of giving the counterfeiters all the information they could use to try and trick the system here,” Olvott said. “But it’s using pattern identification alongside a huge database of variables specific to each ‘silhouette’ that we use as markers to identify the authentic against the counterfeit. This is then supported by a syllabus that we have developed internally to train our teams. As you can imagine, new items are launched every day, so we are constantly updating these methods.
In addition, Laced says that while many others in the space rely heavily on third-party infrastructure, such as Shopify’s, it has built its entire tech stack “with scale and flexibility in mind over the long term.”
“By building our own tech stack and not relying on third-party services, we can deliver speed at every point of the process that exceeds our competitors,” said Olvott.
That said, there’s no escaping the crowded space Laced operates in, and there are plenty of companies already doing something similar and raising significant amounts of venture capital (VC) for their endeavours. These include the California unicorn goat; the British Edit Ldn; Japanese soft drink; Kicks Crew from Los Angeles and Hong Kong; and Michigan-based StockX, which faces an ongoing lawsuit from Nike accusing StockX of selling counterfeit goods.
Elsewhere, Kick Avenue in Indonesia and DawnTown in India have all raised investor money for premium sneaker marketplaces this year.
All this, of course, is to say that despite economic headwinds and consumer anxiety, there remains an almost insatiable appetite for sneaker resale platforms. And with another $12 million in the bank, Laced aims to capitalize on this trend by building out its platform, including investments in technology, product and data science.
“Because the industry and model are so unique, there is no technology we can take off the shelf, so we have had to invest heavily in proprietary technology to provide the best service to our buyers, sellers and our authentication model,” said Olvott . . “We know that by doing this we will unlock the opportunity to scale quickly with a clear purpose.”
Laced’s Series A round was led by London-based investment firm Talis Capital, with participation from H&M’s investment arm, H&M Group Ventures; B&Y Venture partners; Truesight Enterprises; and a handful of angel investors.
