OLD FORT, N.C. (BRAIN) — Kitsbow Cycling Apparel, an employee-owned benefit corp that manufactures in North Carolina, will close in about three weeks after failing to raise enough capital during a community financing round.
"This is also terrible for our investors, new and old, and a blow to the tiny segment of our industry that is attempting to make apparel in the U.S. instead of overseas as 98% of the clothes sold in the U.S. are made," wrote CEO David Billstrom in a blog post on the company's website.
Kitsbow — which started in Petaluma, California, 11 years ago before moving to Western North Carolina in late 2019 — will complete and ship existing made-to-order purchases. The last day of production is expected to be on or about April 7. Kitsbow sells primarily direct-to-consumer.
According to Billstrom, a recent Wefunder round of financing raised about 50% of the $1 million needed to continue.
"While we used what we raised to launch new marketing programs and cover some operating expenses, we really needed the full $1 million to survive and grow. We are deeply grateful for the immediate and intense support of our investors — nearly all customers. But sadly and inevitably, it wasn't enough."
The company also was poised to announce retail partners in Raleigh, North Carolina, Minneapolis, and Seattle.
Billstrom wrote that the company talked with new investors, considered partnerships with other brands, and was willing to sell to another brand.
"The economy has made all of those alternatives impossible. The brands that could truly appreciate the Kitsbow manufacturing expertise were also among those the most financially constrained by their own challenges. In other words, apparel is tough."
Downsizing also was considered — Kitsbow has 41 full-time employees — but rejected because the brand "couldn't survive without enough highly skilled cutters and makers, customer service, and marketing personnel. Our work takes a minimum of our current staffing. We're at our minimum point. We are saddened to realize that the hum and thrum of 100-plus sewing machines will soon cease in Old Fort."
In January 2022, Kitsbow, with assistance from a group of North Carolina investors, became employee-owned. In November, it began gauging interest in the crowdfunding round of financing through Wefunder.
According to Kitsbow, in each of the past three years, it injected an annual payroll of about $2 million into this rural town previously in economic decline for 30 years. Its presence led to a resurgence of local employment, with two manufacturing operations opening in Old Fort.
During the pandemic, Kitsbow was among the first to pivot to making PPE for first-responders and medical professionals when N95 masks were scarce. Kitsbow was able to do this because it had in-house designers and raw materials.
The Old Fort Ride House, located on the first floor of Kitsbow's plant, is now closed for food and drink sales. It will remain open for product sales, with 7,000 inventory items now being marked down 20%.
The Ride House opened shortly after the move from California and offered cyclists and outdoor enthusiasts a place to park their vehicles and gather at the foot of the Pisgah National Forest. Inside is the Old Fort Bike Shop, run by Chad Schoenauer, since September 2021. In a Facebook post later Tuesday, Shoenauer said he will find a way to continue operating in Old Fort. Until then, he will be open his usual hours inside the Ride House.
Billstrom told BRAIN Kitsbow leases the building and that it will continue to "for a while."
