P.S. XO Merges With Toy And Crafts Company Seedling, Raises $7 Million

Two companies targeting the “mom” demographic with a product lineup that includes party supplies, crafts, toys, and more, Seedling and P.S. XO, are now merging. The combined companies have also now raised $7 million in new funding from UpFront Ventures and Greycroft Partners, in light of the deal and the revenue projections as a combined entity. The two are expected to hit $10 million in revenue by year-end, and more than double that by year-end 2015.

You may recall that earlier this month, the family oriented startup Moonfrye, which is best known as the company that claimed child star Soliel Moon Frye (Punky Brewster)’s involvement, officially announced its rebranding and pivot to P.S. XO, an e-commerce company focused on selling invitations and party supplies.

With a new iOS application and a growing e-commerce business, the company led by CEO Kara Nortman, now Chairman at Seedling, was still targeting the parenting crowd the Moonfyre photo editing app once did, but in a far more practical way – with an online shop where you could buy party supplies kits and decorations, plus a mobile app for managing party invites and thank you’s and more.

The business on its own competed with other greeting card startups and party planning resources including the likes of Red Stamp, Sincerely, Paperless Post, Evite, Shutterfly/Tiny Prints, Minted, and Punchbowl, to name a few. P.S. XO was hoping to differentiate itself with its mobile-first focus and a limited product lineup with “mass market” price points.

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Now the company is teaming up with Seedling, in a true “merger of equals” to form a larger company. The new company will retain the Seedling branding, and will offer a one-stop shop for a variety of children- and family focused products, including Seedling’s classic toys, games, and activity kits that appeal to those with the desire to work on arts and crafts projects with their kids, but lack the creative spark (or time, frankly) to get projects up-and-running.

Seedling, a bootstrapped company from New Zealand, has been in business for 7 years and now sells over 350 products in 20 countries both through its website as well as through wholesale and retail channels. The company, which now has offices in L.A. here in the U.S., currently sells to retailers like Neiman Marcus, Nordstrom, Macy’s, Barney’s, Harrods, Selfridges and others. Its retail footprint is the strongest aspect to its business, while P.S. XO brings its e-commerce and mobile capabilities and talent to the merger.

“We have a very similar set of customers,” explains Seedling CEO Phoebe Hayman as to how the two companies compare. “They were doing exactly what we wanted to be doing in that space. Although the retail demand is great, we want to be more than just a company supplying products to the retail market. The opportunity is bigger than that,” she says.

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P.S. XO had previously raised $3.5 million in funding, but this is Seedling’s first outside investment. Seedling had done around $20 million in sales to date, while P.S. XO hadn’t yet been sharing its revenue figures. Now, as noted above, the two businesses plan to hit $10 million this year and $20+ million next year.

Going forward, the P.S. XO product lineup – a smaller selection of around 21 items – will be integrated into Seedling’s website, and Seedling’s products will likely make their way to mobile in the future. (The company didn’t yet have its own mobile application, but the merger changes that.) It’s too soon to say whether or not the P.S. XO brand name itself will remain, the founders tell TechCrunch, but consumers will notice at least some integration of the two online businesses as of today.

P.S. XO has 11 people in the U.S. who will join up with Seedling, though not through relocation. That would roughly double Seedling’s U.S. team, and the new company plans to grow to 25 or 30 in the U.S. following the infusion of the additional capital. (It also has around 35 in Auckland, with some seasonal additions.)

“There is not a single person between the two teams that overlaps,” notes Nortman. “It was one of those unusual, beautiful fits.”

The funding will be used for hiring, plus optimizing and improving the Seedling supply chain.