Stitch Fix Gets $4.75M Series A To Scale Out Its Tech-Enabled Personal Shopping Service

Stitch Fix, the San Francisco-based startup that provides a subscription-based personal shopping and delivery service for women’s clothing, has closed on $4.75 million in new funding, the company tells TechCrunch.

The round, which serves as Stitch Fix’s Series A, was co-led by Baseline Ventures and Lightspeed Venture Partners with the participation of Western Technology Investment.

Stitch Fix has experienced some serious organic growth since it was founded back in February 2011, the company’s founder and CEO Katrina Lake told me in an interview this week, which you can watch in the video embedded above. The company has now served more than 10,000 clients, and has grown its own team to a staff of 50. Meanwhile, its revenue growth has been on a tear, with its annual sales run rate today double what it was just two months ago, in December 2012.

stitchfixThe new funding is meant to put some more fuel on that fire, Lake said, enabling Stitch Fix to hire more staff and further grow its inventory, logistical components, product offerings, and general reach. The company currently has a waitlist of people who are keen to use the service, so this should help it scale up to accommodate the demand.

How it works

Personal styling has been around for a long time, but it’s typically a very expensive and high-friction thing, with each stylist spending hours on just one client. Stitch Fix has created a proprietary set of technology and tools that lets its small team be much more efficient, bringing the cost of personal styling much closer to earth. The average price point of Stitch Fix clothing is $65, Lake says.

Essentially, Stitch Fix operates like a clothing version of Pandora, the personalized radio app — the idea is it gets better the more you use it. It works like this: A new user goes to the Stitch Fix website and fills out a basic form with details about her body shape, size, personal style, and budget. She also rates photos of clothing items and accessories to give Stitch Fix even more of an idea of her taste.

Then, a Stitch Fix stylist uses the provided data to select and ship a box of five items for the user to try on. The user keeps and pays for the items she likes and sends back the ones that she doesn’t (a $20 per box styling fee goes toward any purchases, but is kept by Stitch Fix if the user sends everything back.) The company keeps track of what each user keeps and returns, to further hone its individual client profiles — hence the Pandora Radio analogy. Stitch Fix sources its products just like a department store does, with its own team of buyers and inventory.

It’s a really clever business model that has been embraced by the early-adopting fashion blogger set from the start. It’ll be exciting to see how the company grows further into the mainstream now that it has some nice outside funding in its coffers.

Katrina Lake swung by TechCrunch TV this week to discuss the new funding and Stitch Fix’s technology. She also gave me a hands-on look at how Stitch Fix works by bringing along a box that was put together just for me (although I didn’t actually keep the clothes — darn journalistic ethics!) You can check that out in the video embedded above.