In the two years since Chinedu Eleanya founded Mulberry to be the warranty service for direct to consumer brands, business has boomed.
Already riding a shakeup in consumer behavior brought by the emergence of startup brands selling just about everything to just about everyone, Mulberry brought a much-needed new spin on the warranty service that retailers had depended on for years to make consumers comfortable with big ticket purchases. Now the company is on its way to $10 million in ARR for 2020, thanks in no small part to the new shift to online shopping.
That’s why investors were wiling to invest $10 million into the company back in March before the pandemic hit. The round was led by the early-stage New York-based investment firm Pace Capital, and included returning investors like Founder Collective.
Then the pandemic did hit. With COVID-19 pushing more shoppers (at least the ones that still have money to shop) out of stores and online, the need for warranty services has just ballooned, according to Eleanya.
A serial entrepreneur who moved from Nigeria to New York City and founded companies including Cognical and Zibby, Eleanya has found success with Mulberry and its online model.
To be sure, the company isn’t the only startup working in the e-commerce warranty space. There’s also, Clyde, which raised $14 million around the same time to offer similar services.
But the market for these kinds of online services is still growing rapidly, and Eleanya thinks there’s space for a few winners. “When you think of point of sale financial innovation, the extended warranty space is the most interesting,” he said.
From a retail perspective, lending is good, but the bigger story is that the cost of customer acquisition continues to go up, Eleanya said. For him, retailers need to maximize the long-term value by retaining customers, and the way to do that, he contends, is to offer services programs.
“We’re democratizing access for small and medium sized retailers so they can compete in this really expensive environment,” he said.
Mulberry is already working with some big direct to consumer brands like Mirror, the smart workout mirror, the coffee maker Breville and Nectar Sleep — a Casper mattress competitor.
So far, Mulberry has about $1 million in annual recurring revenue and is on pace to hit $10 million in ARR this year, Eleanya said.