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January 27, 2014 10:40 pm GMT
Procter & Gamble, allow me to introducehair-dye companyMadison Reedandbaby care and home-cleaning-products retailer The Honest Company. Gillette, perhaps you’ve heard of the shaving companiesHarry’sor Dollar Shave Club? And Uniqlo, meet VANCL, the big, online, Chinese-branded clothing retailer. These companies are part of a growing wave of venture capital investments into branded consumer goods predicated on using information technology to reduce costs and the Internet to market directly to customers. It’s all with an eye on replacing entrenched industry players, rather than selling those players the tools they’d need to compete against young upstarts. “It used to be that tech went into the vertical and sold to everybody in the vertical. Now companies are saying ‘No. I’m going to directly compete with you,’” said one venture investor who is backing the eyeglass retailer Warby Parker. That glasses company has set the standard for how startups can try to carve out a market in old-line industries with entrenched competition, according to a number of investors. “This is a big thing in e-commerce,” the Warby Parker investor said. “You can’t compete selling stuff that Amazon has. Where you can compete is when you sell stuff that can’t be on Amazon.” It’s the same realization that Fab.com came to in April of last year, when it decided to acquire the custom furniture shop Massivkonzept. “To be unique in e-commerce means you’ve got to own products, not just sell products,” the investor said. As a thesis, consumer product companies aren’t attracting the same amount of capital as technology offerings in enterprise software, security, or mobile, but the number of investments into companies selling low-tech or no-tech products like razors, soaps, glasses, or clothes, is growing. For these companies, even grabbing 5 percent of the total market means billions of dollars in sales, investors said. In 2012 and 2013 there were at least 26 investments made into consumer products companies, according to data from CrunchBase. That’s up from 16 in 2011, and 13 in 2010. The companies that have raised the largest rounds in this category include Harry’s, the razor blade manufacturer and retailer; Fab.com, which is now making its own furniture; VANCL, the Chinese online clothing retail behemoth; and Bonobos, which has its own brand of preppy upscale casual wear and suits for men. All told, the five companies have raised in excess of $1.1 billion. It’s also worth nothing that of the investors who
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/q_pKi26YiEc/
No Industry Is Safe From VC Disruption
Procter & Gamble, allow me to introducehair-dye companyMadison Reedandbaby care and home-cleaning-products retailer The Honest Company. Gillette, perhaps you’ve heard of the shaving companiesHarry’sor Dollar Shave Club? And Uniqlo, meet VANCL, the big, online, Chinese-branded clothing retailer. These companies are part of a growing wave of venture capital investments into branded consumer goods predicated on using information technology to reduce costs and the Internet to market directly to customers. It’s all with an eye on replacing entrenched industry players, rather than selling those players the tools they’d need to compete against young upstarts. “It used to be that tech went into the vertical and sold to everybody in the vertical. Now companies are saying ‘No. I’m going to directly compete with you,’” said one venture investor who is backing the eyeglass retailer Warby Parker. That glasses company has set the standard for how startups can try to carve out a market in old-line industries with entrenched competition, according to a number of investors. “This is a big thing in e-commerce,” the Warby Parker investor said. “You can’t compete selling stuff that Amazon has. Where you can compete is when you sell stuff that can’t be on Amazon.” It’s the same realization that Fab.com came to in April of last year, when it decided to acquire the custom furniture shop Massivkonzept. “To be unique in e-commerce means you’ve got to own products, not just sell products,” the investor said. As a thesis, consumer product companies aren’t attracting the same amount of capital as technology offerings in enterprise software, security, or mobile, but the number of investments into companies selling low-tech or no-tech products like razors, soaps, glasses, or clothes, is growing. For these companies, even grabbing 5 percent of the total market means billions of dollars in sales, investors said. In 2012 and 2013 there were at least 26 investments made into consumer products companies, according to data from CrunchBase. That’s up from 16 in 2011, and 13 in 2010. The companies that have raised the largest rounds in this category include Harry’s, the razor blade manufacturer and retailer; Fab.com, which is now making its own furniture; VANCL, the Chinese online clothing retail behemoth; and Bonobos, which has its own brand of preppy upscale casual wear and suits for men. All told, the five companies have raised in excess of $1.1 billion. It’s also worth nothing that of the investors whoOriginal Link: http://feedproxy.google.com/~r/Techcrunch/~3/q_pKi26YiEc/
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