Get Your Shoebuy.com Coupon Code Here!!!
In yet another example of the resurgent strength of e-commerce among venture capital investors, Boston-based Shoebuy.com Inc. has closed on $9 million in a B round of funding.
Tudor Ventures of Boston and Apex Venture Partners of Chicago provided the financing.
Founded in 1999, the company had previously raised just $2.7 million in angel financing and claims to have achieved operating profitability in 2001. Shoebuy.com started out by selling shoes but later expanded its offerings to include handbags and luggage.
CEO Scott Savitz wouldn't disclose the company's financial figures in a telephone interview last week, but in a December interview with Mass High Tech he said that the company brought in $1 million for every employee on the payroll. That would peg -revenue for 200.3 at more than $24 million. And for Savitz has said that the past three years revenue grew at 100 percent annually.
The plan for Shoebuy.com had always called for a round of VC financing, Savitz said. He just didn't want to rush it.
"We wanted to build the infrastructure and the fundamentals So that we're built for scale," Savitz said.
Now that the company has achieved the $1 billion mark in virtual inventory, Savitz believed it was time to "hit the accelerator."
Savitz plans to use the new cash to expand into Canada and the United Kingdom, to boost marketing and to add in July a new line of products, which he declined to specify.
For Tudor Ventures, the keys to securing the investment were Shoebuy's ability to hit profitability on a small amount of initial capital and the relationships and integration agreements it has established with manufacturers that have allowed it to create its virtual inventory.
"One of our advisers, a former president of Keds, said the biggest issue you have with footwear is there are so many SKUs (stockkeeping units) - length, width, style," said Carmen Scarpa, a partner at Tudor. "Fashion-wise, these things turn over very quickly."
The ability to ship products without having to keep a large physical inventory gives Shoebuy a big !advantage, Scarpa said.
Shoebuy competes against several other online shoe merchants, including the online division of Seattle-based Nordstrom Inc. and San Franciscobased Zappos.com Inc.
Unlike Shoebuy.com, Zappos.com maintains a large warehouse in Kentucky. It claims to have brought in $70 million in revenue last year.
Savitz had expected the fund raising to take a while and so he contracted innovation Advisors, a boutique investment bank with locations in Boston, New York and Chicago, to manage the raise.
"It turned out there were an awful lot of VCs that were interested in the economics and metrics of the business," Savitz said.
Indeed, the financial community has done a 180 over the past 18 months with respect to e-commerce.
VistaPrint USA, a Waltham-based online printing company, closed on $30 million in VC financing in the fall, and recently two local firms bought out UBS Capital's stake in Watertownbased BuyerZone.com, a price comparison site for business products and services.
Nationally, e-commerce plays are not only performing well in the public markets - both Amazon.com Inc. and eBay Inc. are up more than 58 percent from their stock price one year ago but are also teeing up to go public once again.
Seattle-based Blue Nile Inc., for example, which sells diamonds and jewelry online, has filed for an IPO of up to $83.9 million. Last year it made $27 million on. $128.9 million in revenue.
Likewise, New York-based Shopping .com has filed for an IPO of up to $75 million. For 2003, it made $6.4 million on $67.2 million in revenue.
Is an IPO in the works for Shoebuy?
"We don't have any immediate plans that you'll hear about in the next month, but if it's the right opportunity to give an exit strategy to our investors, well do it," Savitz said.
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