Indochino Stitches Up $4 Million Round to Fund Men's Custom Apparel Site
Indochino, an online retailer that makes custom suits for men, has raised $4 million in venture capital to expand more aggressively, including into more product lines and hiring more executives.
The first round of funding was led by Seattle’s Madrona Venture Group, known for its early investment in Amazon.com.
The small Vancouver, B.C.-based company was started in 2007 when two college students, Kyle Vucko and Heikal Gani, went hunting for a good suit. After being struck by the difficulties of sorting through the options, ranging from Hugo Boss to Men’s Wearhouse, the two college students determined that there must be a better way.
That’s when the idea for Indochino was formed.
He and his partner bought one-way tickets to Shanghai and identified home tailors who could sew a suit in 48 hours and ship it to the U.S. in two to three weeks–all for $300 to $500.
Three years later, Vucko spends a lot of time in a suit.
“It’s an occupational hazard. I’m from the West Coast, which is not a huge suit-wearing culture. I grew up wearing Birkenstocks,” said Vucko, 25, who dropped out of University of Victoria during his final year to start the company.
But now, there’s no turning back.
The company has 35 employees, has developed a significant supply chain (rather than the mom and pop tailors) and has offices in B.C. and Shanghai. It has 17,000-plus clients in 60 countries, and revenues have cracked seven figures with 200 to 300 percent annual growth.
The idea is fairly simple. Teach men how to take their own measurements via step-by-step videos. Let them order online from a number of selections. Ship the suit within three weeks. As incentive, it is sending out free tape measures for a limited time to people who follow them on Twitter and send a Tweet about Indochino.
If it doesn’t fit, there are three options: take it to a local tailor and they’ll refund you the cost to fix it, they’ll remake it, or you can return the suit and get your money back.
“We generally keep every customer that we get. The second suit is click, buy and repeat. From a business perspective, that’s where you make all of your money and margin. From a guy’s perspective, it saves them time and money. You don’t have to go back to the store. Buying online is faster than what it takes to go to a mall,” Vucko said.
Bonobos, which raised $18.5 million recently, is in a somewhat similar niche, although it doesn’t offer tailored clothing, just better fitting clothes. It’s also in the same vein as Milk & Honey, which ships custom high heels to women, or Gemvara, which claims to make user-generated jewelry and recently raised $15 million.