JustFab Raises $76 Million to Get Ahead in the Frothy Fashion Business
JustFab is doing, well, fabulously.
Never mind that there’s a subscription service for nearly everything now, like artisan food, pet treats and makeup.
The El Segundo, Calif.-based company was able to secure $76 million to help establish itself as the leader in subscriptions for women’s apparel. Rho Ventures led the round, with Matrix Partners, Technology Crossover Ventures and JustFab parent company, Intelligent Beauty, also participating.
JustFab sells purses, shoes and other accessories to members for a $39.95 a month membership. Most items are manufactured in China or Vietnam, and are created by the company’s stylist panel, including Kimora Lee Simmons.
Simmons, who is known for her girls’ clothing line Baby Phat (and for her marriage to Russell Simmons), also invested in the company’s first round. To date, the company has raised $139 million, putting it well ahead of its next closest competitor.
In a recent guest post on AllThingsD, Brian O’Malley, a general partner with Battery Ventures who leads its e-commerce practice, wrote that subscription models are totally overblown. “Investors love the concept of repeatable revenue,” O’Malley wrote, but he cautioned that “with high churn rates and the ability in several models to skip deliveries, retention may be only a function of how hard sites make it to cancel.”
JustFab received its first investment from Intelligent Beauty, an incubator in Los Angeles that was started by JustFab founders Adam Goldenberg (pictured right) and Don Ressler. The incubator also produced two very successful companies, including DermStore, a health and beauty e-commerce destination, and Sensa, the well-known weight-loss program.
As part of this round, all of the cash will go back to the business, and not to line the pockets of the founders.
“We live, breathe and sleep this business,” Goldenberg said. “We put our money where our mouth is. Don and I own a large amount of Intelligent Beauty, so instead of distributing out its profits, we reinvested it back into the business.”
The mega round will go toward the company’s international growth plans. It has already launched in Canada and Germany, and has plans to launch in the U.K. in September, and in several other European markets by early next year. It is also interested in making acquisitions.
JustFab is on track to hit $100 million in revenue this year, up from $25 million in 2010, and aims to reach $500 million in sales by 2015.
Goldenberg said JustFab’s ability to raise this big of a round is a testament to the subscription model. “No doubt about it, there’s a little bit of hype, and anyone is willing to throw a subscription model onto anything. But you have to deliver value in exchange for having the subscription commitment,” he said.
The value that JustFab is offering consumers is that for $40, they are getting a pair of shoes that would normally cost $70 to $100 in a department store. JustFab can do this by cutting out several middlemen by creating its own brand, going direct to manufacturers in Asia and selling direct to consumers.
JustFab will take a massive amount of execution, including managing the design process, manufacturing process and delivery, which includes building and maintaining its own warehouses, and looking over its 320 employees.
“We are operational and executional type of guys,” Goldenberg said. “We are working with a phenomonal management teams, who is committed to working around the clock and are passionate about the business. We also have fun because we are building a unique market.”
Here’s the full release:
JustFab Secures $76 Million in Funding as it Leads Personalized Fast Fashion Category
Funds to Fuel International Expansion and Accelerate Development of Lifestyle Fashion Brand
July 26, 2012 —El Segundo, CA — JustFab, the innovative fashion styling service and contemporary fashion brand, today announced that it has secured $76 million in funding. Rho Ventures led the round with participation from Matrix Partners, Technology Crossover Ventures (TCV) and JustFab parent company, Intelligent Beauty. The primary capital will be used to further JustFab’s aggressive international expansion, move into additional fashion categories, and provide cash flow for future acquisitions. Mark Leschly, Managing Partner at Rho Ventures, will join the board.
“At a time when others are retreating from the subscriptions and international markets, we see massive growth and opportunity,” said JustFab co-CEO Adam Goldenberg. “Our rapidly growing, extremely loyal membership base is a resounding endorsement of JustFab’s merchandising and sales model.”
JustFab is the leader in the fashion subscription space, with more than 6 million members. The company combines fast fashion with the industry’s highest level of personalization through its unique community, impressive style panel and high quality, affordable products. Members gain access to discounted pricing, exclusive promotions, and fashion consultants 24/7 in addition to receiving a host of other benefits. Casual shoppers make use of JustFab’s pay-as-you-go pricing, giving consumers the option to try the service before they commit to a monthly subscription.
Company Continues Aggressive International Expansion
JustFab continues to change the way women shop for fashion both in the US and abroad, with more unique visitors than anyone in the industry. It is also rapidly acquiring users in Germany and Canada. Based on its current international success, the company plans to launch in the United Kingdom in September 2012, with several other major European markets added by the end of Q1, 2013.
In addition to furthering its global reach, JustFab plans to use its latest round of funding to expand into new fashion categories requested by its members. JustFab currently offers shoes, handbags, jewelry, denim and other accessories.
“Finding the right partner to grow with us is key at this stage in our business,” says Don Ressler, Co-CEO of JustFab, “Rho’s commitment to building sustainable brands while maintaining the entrepreneurial spirit makes them an ideal partner as we continue our upward trajectory.”
“Adam and Don have aggressively grown JustFab’s membership base, both in the U.S. and abroad,” said Mark Leschly from Rho Ventures, “With impressive revenue every quarter, we are excited to be a part of its continued expansion. This team has a big vision with an established track record of success. We look forward to helping them redefine fashion e-commerce.”
“JustFab has flawlessly executed its plans, proving that there is a right way to do subscriptions,” added Josh Hannah, general partner at Matrix Partners and JustFab board member. “When you combine great value, selection, quality, and personalization with a fun, social shopping experience, you attract and retain members. JustFab has masterfully done what no one else has been able to do, and the team has accomplished it in record time.”
“With its innovative and interactive approach to online fashion sales, JustFab has created a powerful formula for tapping the tremendous growth potential in the global Internet retail market,” says John Drew, TCV general partner and a director on the JustFab board.
To learn more about all that JustFab offers members and new shoppers, please visit www.justfab.com.