Another big round of funding in the currently-chic area of online retail and fashion: JustFab, the online shoe/fashion brand and styling platform with six million members, has raised $76 million, funding that it will use to go big on international expansion. The Series B Round was led by new investor Rho Ventures, with participation from existing backers Matrix Partners, Technology Crossover Ventures (TCV) and Intelligent Beauty, JustFab’s parent company, which incubated and launched the startup in 2010. The total amount of money now raised by JustFab is $139 million.
After a launch in Germany earlier this year that went “significantly better than we expected,” co-CEO Adam Goldenberg tells me that the main priority right now is to continue that international expansion to one of the biggest fashion markets in Europe. “We are launching in the UK in September,” he tells me, with more markets to be added by the first quarter of 2013. Currently, he says, JustFab is adding half a million users every month, and is on track to make $100 million in revenue this year — a big leap on the $28 million of 2011 — on a business model that mixes a subscription-based user-base with other users buying a la carte.
The subscription model, Goldenberg says, has been serving JustFab very well indeed: the VIP program, as it’s called, requires users to spend a minimum of $39.95 each month on items in the store (that’s the flat price for every item as well). He says that what happens is that users visit on average much more frequently, between 25 and 30 times each year. “Every time they ‘walk’ in the door [of the site], we remerchandize the store,” he says, which drives people to buy more. The a la carte model involves users not required to make purchases, but in these cases the items cost between $49 and $79.
Shoes are where JustFab got its start — the styles are geared at the “fast fashion” category of footwear, more Nine West and Steve Madden than Louboutin — and he says this is what has remained most popular. JustFab currently puts in orders for some 4-5 million pairs of shoes annually, and scaling up the business will only improve the financials for this. Manufacturers, he says, tend to require minimum runs of 300,000 on footwear.
But he also adds that some of the $76 million will go towards widening its product base well beyond the shoe category that helped JustFab make its name. “We want to go beyond shoes, bags and jewellery to better compete against the H&Ms and Zaras,” he said. While it will continue to focus on the Just Fab brand, one area that will be a focus are “capsule” collections working with specific designers to create seasonal, temporary lines of clothes. This is an area that has sold very well for H&M and others in the fast fashion retail category.
Another area that JustFab just might see some potential is in the area of acquisitions. Right now growth will be more organic, says Goldenberg. But he’s also aware of the other route, as evidenced by well-funded fashion and design brand Fab, which has made several acquisitions in Europe (most recently Llustre in the UK), to quickly pick up customers and infrastructure.
That’s partly because in Europe there haven’t really emerged competitors offering the same kind of subscription-based business model and around the same kind of fast fashion offering. That’s not the case in JustFab’s home market of the U.S., where it competes against companies like ShoeDazzle and BeachMint (that’s another reason for the international landgrab).
One last category that JustFab has not really touched is mobile: the company still has yet to launch dedicated native apps for users — a surprise given how so many other online fashion brands have closely linked themselves to the platform, and the fact that JustFab itself has already seen a large part of activity on its site come from mobile devices. “It’s a big opportunity,” he admits, adding that native apps will be released later this year.
As part of the funding, Mark Leschly, managing partner at Rho Ventures, will join the board.
Just Fab is a monthly VIP membership program that grants fashion lovers access to celebrity stylists and the hottest shoes and handbags. As a JustFab member, celebrity stylists will review each individual’s style before searching through hundreds of styles recommendations based on personal style and fashion preferences. Each Justfab item is $39.95 and shipping is always free.
Rho has been an active venture capital investor since their inception in 1981. They diversify their investments across various high growth sectors, including information technology, communications, new media, healthcare and energy technology, and invest throughout all stages of a company’s development from seed to growth equity rounds.
Matrix Partners is a US based private equity investment firm focusing on venture capital investments. The firm invests in seed and early stage companies in the software, communications, semiconductors, data storage, Internet and wireless sectors. Matrix Partners has offices in Waltham, MA, Palo Alto, CA, Mumbai, India and Beijing, China.
Technology Crossover Ventures is a venture firm that focuses on information technology. TCV targets the following sectors: Internet, Financial Technology, Infrastructure and Communications, Software and Services. TCV takes both minority and majority positions and provide capital for growth, shareholder liquidity, acquisitions, buyouts, and recapitalizations. They have $7.7 billion under management.
Intelligent Beauty incubates and operates businesses in the personal care, beauty and fashion spaces. The company believes in a better way to launch and grow businesses in the marketplace today, utilizing technology and a disciplined approach to brand building. Since 2006 Intelligent Beauty has created or introduced new businesses and brands to the market including SENSA® (SENSA.com), DERMSTORE® and most recently JustFabulous (JustFab.com) The company was founded in 2006 and is headquartered in Manhattan Beach, California.
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