As part of a trend that wealth managers need to track, a firm that blends investment with adrenaline-driven outdoors adventure says it has found an important niche. It spoke to this publication.

If wealth managers want to get a better handle on what clients want, it’s not enough to ask about equities or school fees. Pastimes, whether collecting watercolours or mastering how to sail a catamaran, can be illuminating. And in a reciprocal way, high net worth individuals like to invest in their passions too. 

An organisation that sees both sides of this equation is Faction Skis, a business that designs and makes skis. (It has been raising fresh funds for investments in recent months.) An independent firm in a market dominated by big brands such as Salomon, Nordica and Rossignol, Faction Skis says it is about more than just skis: it collaborates with the likes of Andorran bike brand Commencal; Faction Skis is also in the film media production business, so there’s a whole outdoors/health/adventure lifestyle thing going on. 

Importantly, wealth managers are taking notice.

“We have been approached by two well-known private banking groups. In both cases, it was a great opportunity to share our disruptive business-building story and also offer their clients the opportunity to invest in a growth company with sales in 45 countries that is both tangible, but also tangibly different from other brands of its kind,” Alex Hoye, co-founder and chief executive of Faction Skis, told this news service recently. “Both situations yielded investment in Faction, but admittedly my favourite of the two was one that included skiing on our products with their interesting clients in Switzerland. It must have been mutually enjoyable as we were asked back again this year. We have not reached out to such groups, but I would be more than willing to help them host events which might focus on a mix of the business story, the people, the products and, in an ideal world, getting out into the mountains and testing the difference!”

Hoye’s business may account for less than 3 per cent of the total ski-equipment/apparel sector, but the upside even here is vast. With a large and increasingly affluent middle class developing in countries such as China, an appetite for the sort of lifestyle and brand that Faction Skis is selling is bound to be considerable. Faction has become an aspirational brand in the Chinese market. For example, the first AFP-sanctioned (Association of Freeskiing Professionals) freeski competition in China was co-sponsored by Faction.

Some of the figures are mind-boggling: The Chinese skiing boom has already fuelled the construction of more than 700 domestic indoor and outdoor ski resorts. In the lead up to the 2022 Beijing Winter Olympics, President Xi Jinping has stated his intention of encouraging a 20 per cent growth in skiers each year reaching over 100 million by the time of the Games, and 300 million skiers by 2030. (Your correspondent also noticed how many Chinese nationals were in Switzerland recently, clad in expensive ski wear as they eyed Rolex and Patek Philippe watch stores in the Jungfrau region.)

Faction Skis has been in fund-raising mode. Late last year it closed 90 per cent of its £4.5 million ($5.9 million) investment round. The firm is nearing €10 million ($11.31 million) in revenues. UK-based Octopus Ventures has invested in it and has supported the business since 2012; the majority of its backing has come from over £10 million invested by angel investors. 

New face of luxury
A business model such as Faction Skis throws light on the difference between a luxury sector and a more mainstream one – something that wealth managers must grasp. 

“With people's focus on quality, story and experience defining the retail and media landscape today, you must deliver price-point basics very well or differentiated premium quality with meaning. You could roughly say that it's a choice between mainstream and luxury,” Hoye said. “Whereas we're surely not aiming to become any sort of mainstream, our approach isn't geared towards pure luxury products either. What we do is capitalise on the gap left by generalist retailers and multi-brand conglomerates, and with confidence, carving our own corner of differentiated premium quality with meaning in the ski industry.”

“It's about the experience, and just like with a better car, a better phone, the experience is going to be enhanced and easier with a better product. What we put into the materials, the shapes, and the testing is quite special and our aim with this is to provide a better product to foster better experiences,” he said. 

Hoye is something of a serial entrepreneur and angel investor with experience in areas such as digital technology and its impact on business. He founded the Faction Collective in 2006. He has also been CEO of Latitude Digital Marketing (2008-2012) and was co-founder (holding several C-suite slots) at GoIndustry plc. He has plenty of academic and business smarts: he was a management consultant at McKinsey in the late 90s, has a Masters in business administration from the Harvard Business School, and graduated in economics and international relations at Stanford University. 

Main lines
Faction Skis’ main lines are Dictator, Prime, and Prodigy, with the Dictator and Prodigy series typically involved in some kind of creative collaboration, whereas its Candide Thovex Signature Series is curated as a unique, limited edition each season.

The firm also produces Alpine consumer outwear and is rolling out its sister brand, known as “FW: Gear for Alpine Living” for the 2019/2020 Winter season.

Making movies
Faction also makes films and started out – because it didn’t have a big budget – to use new tech such as drones and rider-steady steady cameras to convey the thrills and spills of life on the slopes. In 2017 Faction published its first full-length feature film “This Is Home” and hosted a 300-stop film tour spanning 32 countries to launch it. 2018 saw the launch of “The Faction Collective Presents” series including “La Grave”, featuring athletes Sam Anthamatten and Johnny Collinson, and Faction is in production with its next film due for a 2019 launch.

The business is majority-owned by angel investors, part of what the organisation calls the The Faction Collective”. And those investors are not just looking to make money, but are enthusiasts about skiing and the outdoors life more broadly. 

“The Faction Collective is an independent group of professional skiers, artists, film-makers, staff, partners, investors and fans that has grown over the past 12 years to more than just a sum of its parts and is united by a love for the mountains and the tools that allow us to escape there,” Hoye said.

“Being an angel investor myself and with Faction’s DNA and our aim of doing things better and differently, we've committed to enabling skiers and angels who back the company to benefit from shareholder value appreciation from the very beginning and into the future. Everyone is provided with the opportunity to own a percentage of shares in one of the world’s fastest-growing ski brands, which we think is pretty cool and a very organic way of engaging with our core audience, our skier fans, and basically anyone who's interested in what we're doing here at Faction,” Hoye continued.

And Hoye says new media channels are changing how such businesses operate – just as they doing in areas such as fintech. 

“The digital and social media revolution has also enabled us to reach millions of consumers directly - existing as well as potential - and we have an unprecedented opportunity to change the brand landscape with premium, innovative brands,” Hoye said.

“We don't rely on traditional advertising but stand out by creating and publishing our own content of original films and social media. I guess that’s what’s most different about Faction, what makes us agile and keeps us ahead of the market and able to capitalise on the gap left by generalist retailers and multi-brand conglomerates,” Hoye added.

Where in the world do Faction members come from? 

The business is global – the Faction Collective is a global community reaching from Tirol to Tokyo and beyond. The company is made up of 29 people form nine countries; there are offices in London, Innsbruck and Breckenridge, with design and R&D happening in Switzerland and production in the Alps.

So what of the future?

“We’re nearing key thresholds of €10 million in revenues, accelerating growth and considering selective acquisitions, which could benefit from Faction’s global sales and media reach. However, having already invested in a strong foundation, our focus is switching towards profit margins, with the management team driving to a goal of secondary rise by 2021 and an aim to be retail investment ready by 2022,” Hoye said.  

“The five-year plan has Faction’s sales quadrupling for season 2022-23 but still focusing on only 2.5 per cent of the market. These forecasts do not take the significant opportunities in China into account, but we’re thrilled by our expansion into outerwear for the 2018-19 season - and will continue to explore exciting collaborations with creative artists that inspire us and match our brand values,” he continued.  

Entrepreneurs and other creative individuals want to have experiences and camaraderie with like-minded people while following healthy pursuits, and also being investors. This seems to be a core theme of what Faction is about.

“It was less a matter of 'building it, hoping they will come' and more a reflection of reality.  Faction's investor base includes venture capitalists primarily focused on internet ventures, private equity fund directors, marketing agency founders and classic investment bankers,” Hoye said.

He gave the example of how such people recently converged on the mountain slopes around Verbier to talk new ski technology developments, try on outerwear range, ski with Freeride World Tour judges and pro skiers and the management team of engineers, marketers and artists at Faction. 

“Money can buy products, but this is an experience shared with others who share a passion. They may not want to chuck their business and family lives away to become permanent ski bums, but they can do it with style for the weekend with fellow travellers,” he said.