Lululemon was founded in 1998 at a time when gym clothes were typically cut-off, hole-filled t-shirts and shorts from twenty years ago. Lululemon founder Chip Wilson saw an opportunity to elevate workout wear, and the company created the first popular formula of “yoga pants” or skin-tight leggings. 

In the more than twenty years since, “athleisure” has become a global fashion trend. Adolescents are six times more likely to name an athletic company as their favorite clothing brand than they were in the 2000s. Lululemon’s value has grown by almost 2,000% in the last ten years. Though some experts believe that closets are now saturated with athleisure, others speculate that a new variety of athleisure — one that can transition (someday) back to the office — could spark the next phase of industry’s growth. 

While the precise variety of athleisure consumers will demand over the next ten years is somewhat unclear, the demand for comfortable clothes that transition seamlessly from workout to lifestyle will almost certainly remain strong. 

Kobrelms is an athletic wear and athleisure company manufacturing leggings, tank tops, sweatshirts, and more for the active and stylish consumer. The company’s products are roughly $20 each, including an ancillary line of audio products like wireless earbuds and headphones to outfit customers’ ears, as well as bodies, for the gym.

Kobrelms was incorporated in October 2019. It has since secured manufacturers, launched a website, and begun marketing on social media. Kobrelms products are currently sold direct-to-consumer on the company’s website. Kobrelms does not appear to have generated meaningful revenue since launch. 

Kobrelms was founded by Joseph Yuyi. Outside of Kobrelms, Yuyi serves as a Senior Consulting Engineer for ResFrac Corporation. He has over ten years of experience in the oil and gas industry and has served in various roles as a technical expert in that space.

Kobrelms plans to use capital raised on Microventures primarily to build up product inventory and conduct marketing campaigns. Additional line items include research and development, general working capital, and future wages. 

Kobrelm’s immediate growth goals include launching an Amazon store to provide another stream of revenue on top of DTC sales as well as launching additional products including joggers, hoodies, vests, and more. The company also plans to offer additional customization options for customers, including various options for color and logo placement.

In the long term, Kobrelms hopes to launch additional products across both clothing and workout technology verticals. Ultimately, it wants to compete with the likes of Nike and Lululemon as a leading athletic wear and athleisure brand.

After careful consideration of the company’s areas of opportunity and seeming weaknesses, Kobrelms has been ranked as an Underweight deal. Investors should consider two fundamental risks when evaluating this opportunity: 

• No differentiation within an extremely crowded market: While athleisure is certainly one of the largest clothing trends of the last five years, a huge number of companies are competing viciously to win market share. Incumbents like Nike, Adidas, and Lululemon sell billions of dollars of athletic wear each year. Numerous mid-sized competitors — like Fabletics and Outdoor Voices — occupy a smaller portion of consumers’ closets. In a market this crowded, it is essential for a new brand to have strongly differentiated products or to have a strongly differentiated brand with significant capital to spend on customer acquisition. Kobrelms does not benefit from any of these advantages. The company’s products look very similar to that of any other competitor, and its brand messaging is also indistinguishable.

• No traction: Kobrelms is participating in crowdfunding under slimmed reporting regulations due to COVID-19, so full financials are not available. However, it seems that the company has not generated any meaningful revenue since incorporating in October 2019. Kobrelms reports 439% growth on social media since launch and has purportedly partnered with several influencers. However, the brand has only 257 followers on Instagram as of this writing, so dramatic growth statistics are somewhat misleading. Between lack of revenue traction and lack of social media following, there are no signals to indicate that Kobrelms is attracting customers in the market. 

Investing in early-stage companies always requires some measure of faith in a company’s future success despite minimal data to guarantee that outcome. However, Kobrelms offers even fewer data than most early-stage startups to indicate that consumers have any interest in the company’s undifferentiated products. Therefore, Kobrelms is an Underweight deal.