Breaking the Silence
Beyond the Exposé : Mestrae's Next Chapter
Hello everyone,
Earlier this year we shared Mestrae's story on facing numerous challenges. 2 months ago, we published a full exposé. Talking about this has not been easy. We want to give you a lowdown on what went down after that, tackling hurdles, and what's next for Mestrae. There were also many concerns and questions about this and I would like to address some of them here.
How was the initial journey of Mestrae?
Mestrae started from scratch and quickly grew its presence in 30+ countries. We developed our own manufacturing capabilities and a strong global supply chain. Its in-house creations won innovation awards and earned recognition as a top 10 startup by the Prime Minister.
Does Mestrae rely on funding or is it self-sustainable?
Mestrae is a product/hardware-based startup, which requires significant expenses in areas of r&d, moulds, machinery, inventory, testing, regulatory and more, and several times more costly when compared to a conventional footwear line or a SW Company as it is created from ground up. The return on investment will gradually offset the cost, making it self-sustainable over time.
What is the challenge with early-stage funding?
Early-stage funding in Malaysia is only 10% of global average, and from this, mostly circulated via grants with policies favoring entrepreneurs with significant financial resources. While this impacts mid-income entrepreneurs which are most Malaysians, minority entrepreneurs' have <5% possibility in accessing grants, loans, and equity initiatives in accordance with the constitution.
What grant did Mestrae receive and what was the problem with it?
Mestrae was awarded a reimbursement and tranche-matching grant after going through multiple qualifier rounds and pitches through a steering committee with a legal binding contract. This grant came with detailed and extensive requirements. As it's a ‘pay-first, claim later’ reimbursement fund, Mestrae incurred debts, met all requirements, and surpassed expectations.
However, the grant rules were modified when it was time to disburse the funds. They demanded a significant cash display or risk grant denial. Our appeals to be evaluated based on merits and original tranche requirements were denied. Meetings with the grant providers resulted in dismissive responses and a lack of resolution.
Are there other funding opportunities?
We pursued loans, grants, equity investment, and crowdfunding but faced obstacles. Fashion businesses are often blacklisted by banks for loans, and minorities face limited access to gov’t-backed loans. Grants proved challenging, with one refusing to disburse funds and another requiring bribes, which we refused. Equity funders, particularly for early-stage investments, are limited, mostly bankers with limited interest in fashion tech for women.
What is the impact of a non-disbursed grant and how are we overcoming it?
½ million debts and a lot of legal issues. I have been taking on multiple jobs on the side, often working 12-18 hours daily for the past few years - but we are only halfway recovered. This work overload is not the wisest choice, but out of desperation.
Has this happened to other startups locally?
Yes, this exposure led to a lot of startups openly sharing their struggles and many alike. Some took 10 - 20 years to recover which made me realize that I needed better solutions.
What happened to our footwear manufacturing?
Due to financial constraints, we had to discontinue our in-house manufacturing, let go of our team and leasing obligations. Consequently, we transitioned to relying on local footwear manufacturers.
What is the problem with the local footwear industry?
Local footwear lacks economic support due to outdated low-tech manufacturing, lack of digital penetration on sales, and limited ability to compete with global supply facilities. The industry is predominantly composed of elderly shoemakers within a close-knit, race-based community.
During pre-pandemic, when we switched to relying on the local footwear industry, we observed a steep decline in manufacturers and suppliers. During Covid-19, a high influx of shoemakers let go of their workforce and relied on gig economy jobs, leaving few remnants of the industry. Additionally, some of our inventory was ruined due to flooding during the lockdown.
After the lockdown, limited recovery is observed. Due to a shortage of suppliers, 90% of our raw materials are now imported, resulting in increased costs. Additionally, many of our moulds had to be redone, integrated, and tested with new suppliers.
Working with local shoemakers has been challenging due to their preference for established businesses - and we get it. Our unique footwear process and small order size can be cumbersome to an already small pool of shoemakers struggling to survive, resulting in delays and conflicting priorities.
Currently, we have divided existing orders into three sub-integrating processes across three states, but as these are handmade, it hampers quality control and makes it difficult to identify root causes and find appropriate solutions.
What's the next step for manufacturing?
As we have exhausted local manufacturing options, we are scouting to migrate footwear manufacturing within South East Asia where the options of handmade skill combined with high tech manufacturing is blooming. This process takes time as we have to scout, audit, train, and do a test run before we are good to go.
But accomplishing this will solve a long lingering manufacturing problem that’s been holding us back.
What’s the next step for Mestrae in terms of funding?
Quite frankly, I was going to continue working non-stop because of the continuous stress in debt settlement and shoe delivery, but after speaking to many startups who went through this, I took a moment to step back and reflect. I also had the benefit of speaking to local startups who migrated.
Mestrae has started engagement with multiple investors, footwear buyers and partners to support our ongoing work. We strongly believe that our product is highly beneficial for high heels users globally, and we aim to make it an everyday standard lifestyle choice. This marks our first full exploration beyond the country's borders, and the response has been positive. We are confident in finding a broader range of investors and partners who share our sentiments.
What is the typical duration for funding and manufacturing migration processes?
As for funding, the timeline is uncertain. It could range from a single day to as long as 2 weeks or even 3 months. On the other hand, the manufacturing migration process, from scouting to the pilot run stage, is expected to take approximately three months.I have nearly returned to dedicating my full attention to Mestrae and have discontinued most of my side gigs. Despite the existing debts, it is a risk that I feel I have to take to bring Mestrae to the next stage.
How long does it take for Mestrae's full recovery as an interchangeable heels brand ?
As of now, Mestrae is in the midst of audit & tax completion, investor meetings, speaking to buyers, and partners as well as scouting for manufacturing - give and take working in parallel takes 3 months. Given we go full-on with funds and manufacturing ease, Mestrae will work on a few quality, robustness, and aesthetic improvements, before we ship. We hope to spend this year in full recovery.
Achieving this would be us shipping out with utmost satisfaction.
What type of tech does Mestrae fall under?
Mestrae is a fashion technology. It’s heavy on mechanical complications in its sole, lock, integration and it dips into deep tech in the areas of 3D manufacturing, clean tech and wearable. We believe Mestrae has a lot of potential as a catalyst for high tech manufacturing, sustainable fashion and wearable advancement.
What is Mestrae's global ranking among Interchangeable Heels brands?
From a technology and feature perspective, we rank right on top. For more details on feature comparisons, you can visit mestrae.substack.com. For design, we are focusing on the ones customers love and removing the rest. From a manufacturing, quality and delivery perspective, we have a lot of improvements to work on.
What does debt recovery entail?
It has been a bit brutal - I have written about this in both my blog and my expose. I’ll share the links below.
What was the impact on health - some asked if this led to being suicidal
It is immensely stressful, but suicide has not been on my mind. Nonetheless, I have been obsessed with wanting to get the shoes out and be done with debts which led to continuous overworking, and it did take a big toll on my health physically. But live and learn. I believe in finding every opportunity possible with what we have. But I do want to acknowledge that there are many entrepreneurs who are deeply struggling.
What is the impact of exposing discrimination and corruption?
A lot of angst, mockery and many inquisitions. In retrospect, in the past, speaking out led to imprisonment, and whistleblowers have had brutal deaths.
As of now, I’m called to give a statement in the District Police Station of Brickfields in the next 2 weeks.
But what surprised me the most was the many startups who opened up and said ‘thank you for sharing, we will share our story too’ . It surprised me because for the longest time, I thought this only happened to me and that I was the problem.
When the majority of the funds are channeled through grants and favors the rich, it impacts most Malaysians, regardless of race. On top of that, dealing with racism, corruption, and lack of economic support on an industry level - these are real problems we must address. It took me a really long time to open up about oppression as it’s not an easy feat.
Did the Prime Minister, Minister of Economy, or the Minister of Entrepreneurship directly address this issue?
No, they did not respond nor reach out. They are aware of it as they have been informed via email in advance before I released it publicly.
The Exposé links
Vulcan Post : When success isn’t enough : How a government grant plunged our startup into debt (Media)
Medium : A year in review (Blog)
Thank you for reading. I will be reaching out and replying to all customer emails and messages throughout this week on your designs, sizes and order delivery. I know we have not been at our best for some time now. Hang in there with us. We’ll get there.
- Pam