How Underwear Startup Parade Wiped Out Investors

When lingerie manufacturer Ariela & Associates International announced its purchase of buzzy direct-to-consumer intimates startup Parade in August, the deal appeared to be yet another example of larger holding companies and licensing firms buying up popular digitally native brands.

Parade, valued by investors last year at about $200 million, wound up with a last-ditch sale, in a process similar to a bankruptcy liquidation. The process wiped out essentially all its shareholders, according to three people with direct knowledge of the situation. Internal financial data show that Parade was in danger of running out of cash if it didn’t sell or raise more money: It had only $7.3 million in cash at the end of 2022 but was expected to burn more cash than that in 2023. The details illustrate the severe strains facing many DTC startups that grew quickly by spending heavily on search and social media ads to reach online shoppers.