Birchbox Raises $60M to Make Beauty Products Go Viral

Birchbox Raises $60M to Make Beauty Products Go Viral
By Lora Kolodny.  Source: Wall Street Journal.

Birchbox Inc., a startup that delivers a monthly selection of beauty products to members for a fee, has raised $60 million in a new round of venture funding led by Viking Global Investors and joined by the company’s earlier backers.

The startup is widely viewed as a powerhouse in so-called “subscription commerce,” in which consumers pay for monthly delivery of goods to their doorstep.

Other venture-funded companies that sell packages of select goods to monthly subscribers include NatureBox for snack foods, ADKM Inc. known as Harry’s Razor Co. and Dollar Shave Club for mens’ grooming products, H. Bloom and for flowers, and BarkBox for pet products.

Co-founder and CEO Katia Beauchamp disdains the “subscription” label, however.

Far from being a generic, auto-fulfillment service, she says, Birchbox works with its partners on everything from product development to packaging design. And as transactions go, getting a “Birchbox” is just the beginning of a “long-term relationship with the brand,” she said.

Birchbox now offers Web, smartphone and tablet apps, and it is opening its own brick-and-mortar store this summer after dabbling in physical retail through pop-up shops and other initiatives.

The New York City startup plans to use its newly raised capital for hiring, geographic expansion and to raise awareness about Birchbox beyond word-of-mouth, the CEO said. The company currently employs about 250 in the U.S. and Europe.

It also plans to provide partners in the beauty industry with more data about the impact of their products being included in a “Birchbox,” the CEO said.

Typically, 10% of Birchbox subscribers go on to buy a full-sized product (via after experiencing a trial or sample-size in one of the company’s curated packages.

Ms. Beauchamp is interested in gathering and sharing more data about product purchases made at other brick-and-mortar and brand stores online, as a result of distribution and discovery via Birchbox.

Longer-term, the CEO confirmed, Birchbox is likely to introduce a house brand, but not in the way that a beauty retailer like Sephora might.

She said the company would “own, invest in and partner in the creation of a [product],” rather than making a store-brand that feels like a lower-price or generic play.

Investors in the deal did not respond immediately for comment.

The CEO declined to disclose terms of the Series B investment, including a valuation.

The startup has partnered with more than 800 beauty brands including Lancôme, Laura Mercier, Benefit, Stila, Caudalie, Payot, L’Occitane, Bourjois and L’Oreal. It sells more than 6,500 products on its site.

Earlier the company raised $12 million in seed and Series A funding. Earlier backers also joined the Series B investment in Birchbox, including First Round Capital, Accel Partners, Aspect Partners, Glynn Capital, Comcast Ventures, Sam Lessin, Consigliere Brand Capital, Slow Ventures, Red Swan Ventures and TriplePoint Venture Growth BDC Corp.

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