The Empress's New Clothes
Big money investors fell prey to a fashion industry fairy tale
“Fashion doesn’t have to prove that it is serious.” – Karl Lagerfeld
Some of America’s biggest investors have fallen for what may be the most audacious scheme since Elizabeth Holmes peddled fake blood tests at Theranos.
Venture capital and private equity giants dumped hundreds of millions into CaaStle, a fashion technology startup that promised big profits from “clothing as a service.”
Founder Christine Hunsicker, 48, described it as SaaS, or “software as a service,” only with garb.
“Nobody makes money in apparel,” the lauded fashion industry entrepreneur said on a 2023 call with investors, according to The Wall Street Journal. “We have the solution. We make more money for everybody.”
What investors liked was her promise of recurring subscription revenue from a service that helped retailers rent their inventories. CaaStle touted partnerships with Ann Taylor, American Eagle, ba&sh, Banana Republic, Express, Ralph Lauren, Maje, and Vince.
Dropping big names helped investors to overlook the obvious reality that clothes are not software. As we all know, clothing can not be magically streamed like a movie. It has to be packaged, delivered, returned, stored and cleaned, which can cost more money than it generates.
Nevertheless, CaaStle was widely lauded as the “Netflix of fashion.”
Hunsicker claimed the company, formerly called Gwynnie Bee, was worth $1.4 billion. And she reportedly raised $534 million with little more than a digital-age fantasy.
CaaStle has since been sacked with lawsuits, it filed bankruptcy in June, and on Friday prosecutors announced a sweeping, six-count indictment against Hunsicker alleging a $300 million fraud at CaaStle and a sister company called P180.
Prosecutors say Hunsicker was a poser who duped investors with bogus financial statements that she stitched out of whole cloth between February 2019 and March 2025.
Hunsicker pleaded not guilty and was released on $1 million bail. Her attorneys issued a statement saying prosecutors “have chosen to present to the public an incomplete and very distorted picture.”
The indictment doesn’t name victims – because who wants to be undressed in public for investing in something as stupid as this?
Hunsicker once listed some some pretty big investor names. But who knows what’s true because she is accused of spinning more threads than a Bangladeshi sweat shop.
Hunsicker claimed to have raised money from Bill Ackman at Pershing Square, Jim Breyer of Breyer Capital, Peter Fenton of Benchmark, Henry Kravis at KKR, Peter Thiel of Founders Fund, and even former Stanford University president John Hennessy, according to The Wall Street Journal.
Other reports list former Amazon executive Ram Shriram of Serpalo Ventures, investment banker Kamal Tayara of KCP Capital, and Geoff Schneider of Cava Capital, who once promised that Hunsicker’s company was “setting the stage for a new relationship between people and their clothes.”
It’s unclear from the indictment who may have lost what. But these luminaries gather funds from public institutions such as pension funds and universities, so it’s fair to wonder what they might buy next.
A new relationship with your duds? Clothing as a service? How about laundromats as AI-powered fabric refresher networks? Instead of quarters, they run on crypto! Yes, the perfect investment for anyone who believes that the empress has clothes.
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