Scaling a Purpose-Driven Fashion Brand: Growth Through Investment and Loans

Founded in 2015 by three friends, The Knotty Ones brings Lithuania’s rich knitting tradition to the forefront of modern fashion while empowering female artisans. The brand challenges exploitative fashion norms by spotlighting makers and creating meaningful work opportunities. To scale its mission, The Knotty Ones sought investment from business angels and an EU-backed loan, balancing purpose-driven growth with financial sustainability. This is their story:

When The Knotty Ones was established, its co-founders aimed to bring the Lithuanian tradition of knitting to the forefront of fashion and change consumers’ perceptions of knitwear. To this end, Akvilė, Sandra and Danutė chose to start a business and prioritise growth over profitability. When wholesale orders from the US started coming in during their off-season in 2022, requiring upfront investment in stock with payments arriving later, it created a need to better manage their cash flow. The Knotty Ones needed a solution to bridge this gap and support the growth of their business-to-business activities.

“Don’t close yourself off, and don’t limit yourself—talk to people that have been through this journey, communicate, and ask for help.”

The women spent around six months trying to connect with business angel investors that matched their ambitions. In 2020, they attracted their first three business angels and secured an investment from Coinvest Capital, a venture capital fund backed by the Lithuanian state and the EU, which aims to bolster the Lithuanian business angel ecosystem. Ultimately, The Knotty Ones found business angel investors with the right expertise and confidence in their mission, both locally and abroad. Later, in 2022, as their business was growing, B2B opportunities were ushered in during the off-season, and financial support was needed to realise the wholesale orders. To achieve this, the Knotty Ones secured a European Investment Fund-backed loan through Noviti, a non-bank business financier. This enabled them to invest in production and build up their stock.

“Investors are in it for the long run; you invite them to share your company. If you choose the right investors, it enriches your business.”

For the founders of The Knotty Ones, finding the right investors during the start-up phase was a more demanding process than applying for a loan. Many investors were dismissive, not taking the female founders or the company's focus on traditional crafts seriously. Meškauskaitė-Dobrajs remembers the process of finding the right investors as a learning curve: “It took us a lot of time, and we tried different methods. You learn by doing it.” Through personal connections, web browsing, reading industry- and investment-related news, reviewing organisation lists, and tirelessly calling and emailing, the trio researched, persevered, and built connections until they found the right fit.

Different Needs, Different Financing

The process for applying for an EU-guaranteed loan was different. For The Knotty Ones, as an SME, this type of loan through Noviti was favourable, especially compared to a loan from a traditional bank. Recipients of loans are expected to be profit-oriented rather than growth-focused and must prove their profitability. This was not feasible for The Knotty Ones as a start-up. 'The loan application process was relatively smooth and straightforward,' says Akvilė, 'and it was very important for us to be able to fulfil major B2B orders', she notes that such tools are expensive yet significant, as SMEs usually do not have the same financing opportunities as larger companies. However, as the co-founder points out, it is essential to do your research, prepare the correct documentation, reports and targets, and be prepared to negotiate. The EU-guaranteed loan enabled The Knotty Ones to invest in production and build up stock. 92% of this stock is now sold outside the domestic market, with 60% sold in the US.

However, securing the right business angel investors has had an even greater impact on the company's growth. One of these investors was Leva Zubavičiūtė, a UK-based Lithuanian who guided and supported the business before ultimately joining The Knotty Ones as CEO. “Investors are in it for the long run—you're inviting them to share your company. If you choose the right ones, they can enrich your business” says Meškauskaitė-Dobrajs. Working with investors both locally and abroad has provided The Knotty Ones with diverse insights. Consulting with people who have different experiences and areas of expertise has enabled the company to think bigger and plan its next steps, such as replicating its model of employing and empowering local artisans in the US.

The Knotty Ones' journey has taught them an important lesson: when looking for capital, it is crucial to know exactly what it is for. Are you seeking long-term investment, support, and involvement in the company, or a short-term commitment to bridge a financing gap or develop operations? Your goals must be clear from the outset. As The Knotty Ones discovered, there is plenty of capital out there, and many people are willing to share it, along with their knowledge. “Don’t close yourself off, and don’t limit yourself—talk to people who have been through this journey, communicate, and ask for help,” advises Akvilė.

Images: Courtesy of The Knotty Ones

This Case Study was created under Creative FLIP, an EU co-funded project aimed at further increasing the long-term resilience of the CCSI in key areas such as Finance, Finance, Learning, Working Conditions, Innovation & Intellectual Property Rights.

Key Takeaways

Understanding your financial needs is key, whether it's shorter-term financing through loans or longer-term investment from business angels.
Smart money matters, as the right investors provide guidance, not just capital. Nonetheless: finding investors requires persistence and research.
Ultimately, diversifying your financing sources, combining loans and investment, enables sustainable growth while preserving your mission.

Scaling a Purpose-Driven Fashion Brand: Growth Through Investment and Loans

Finance

Resilience through Finance

Design & Fashion

Artistic Crafts

“Don’t close yourself off, and don’t limit yourself—talk to people that have been through this journey, communicate, and ask for help.”

“Investors are in it for the long run; you invite them to share your company. If you choose the right investors, it enriches your business.”

Interviewee

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