This month, Tom Conley, outgoing president of the Toy Industry Association (TIA) (view article), tells TDmonthly Magazine what the trends of startup and backing capital are in the toy industry. Are the money sources getting tighter, as in other industries? And the big question: Where do startups go to get funding?
|We offer global opportunities for marketers; by
joining TIA, they get a foothold in North America. We can help.
TDmonthly: Things are changing rapidly in the toy industry: bankruptcies, downgraded stocks, companies being taken private. How is this affecting the investors?
Conley: I think itís tough these days in any business. The consolidation at the retail level; economic pressures, as a society; hurricanes; the rising of interest rates, all contribute to complex times. In this setting, money is difficult to come by; thereís only been one or two IPOís on the New York Stock Exchange lately. Having said that, the toy industry is looking very positive on the whole.
TDmonthly: Why is that?
Conley: Itís the nature of the toy industry. There are so many entrepreneurs and inventors coming up with good ideas that they can then take to retailers and manufacturers and sell them. Itís an opportunity that isnít that expensive Ö unless they want to do everything (including the manufacturing) themselves. Itís a very active and talented designer community we have, and of the new toys that come out every year, many are from the staff designers at the bigger companies, but a huge number come from freelancers, which is not like in other industries. We are much more flexible and self-renewing because of that.
TDmonthly: So where does one go to get starter money?
Conley: There are actually companies to match a designer with a marketer, or help the designer find capital; thereís a whole network of folks who understand this business and have access to dollars that will invest. TIA tries to lure them to the Toy Fair, and weíve had pretty good success. We know that we get Wall Street people, many from the publicly traded toy companies like Mattel and Hasbro; they want to come and test the industry and talk to the TIA members. Some of those have private rooms and take meetings. Smaller investors, who understand the toy industry and have made investments in the past, come back looking for other opportunities. The two toy design schools, Otis and TFI (The Fashion Institute) support startups, too. Part of their job is trying to place their students, and their faculty, who all work in the industry, will take ideas and help get them funded, or at least get them introduced to people who can fund them.
TDmonthly: How about foreign investors?
Conley: We have a program where TIA reaches out to other countries and other toy associations, inviting them to try the U.S. market. Lately weíve stepped up the effort. We see real potential for marketers to come to the U.S. and try it out. Germany, Taiwan, India, Korea ó all have manufacturing facilities on a large scale, and for their local markets already; their toy companies are pretty sophisticated and looking to expand. We offer global opportunities for marketers; by joining TIA, they get a foothold in North America. We can help.
TDmonthly: And the future?
Conley: With the recent currency situation, the dollar dropping, Iím seeing more international investors coming to America to find acquisitions, because the foreign currencies can buy more against the weak U.S. dollar. I see that as a positive thing with great potential.