Ok, further proof that it’s looking like 1999 all over again. A huge financial meltdown is just around the corner, and front line venture capitalists are spending money on ecommerce sites. Except this time around it isn’t pet sites. This time, it’s diapers.
Diapers.com, was founded in 2005 by two new dads and has raised two rounds of capital, including a $7 million round led by Bessemer Venture Partners in 2007. The original investor group included Nicholas Negroponte of One Laptop Per Child fame. We’ve got word from a source that the company, based on strong revenue growth, has raised a new and much larger round led by Accel Partners. Yes, the same Accel Partners that invested in Facebook.
Perhaps there’s big money in diapers, but competing with Amazon, BabiesRUs and Drugstore.com, all of which sell diapers, could be a problem in the long run. And the Wall Street Journal noted the site as having the cheapest prices on both Pampers and Seventh Generation brands of diapers, so their margins must be razor thin. But I guess that even if you lose a little on every transaction, you can make it up with volume.
Diapers.com also has the mandatory Green Baby section featuring diapers that are “eco-friendly, natural and organic.” Who knows if they’re better for the environment, but the margins are certainly healthier.