New York e-commerce jewelry company BaubleBar has raised a Series A round of funding worth $4.5 million. The capital comes from prior investor Accel Partners and new investor Greycroft Partners, topping up the company’s initial $1.1 million seed round from Accel, Founder Collective, Lerer Ventures, and angel investors Blair Effron, Jonathan Teo, Lena Goldberg and Julie Macklowe. Co-founder Daniella Yacobovsky said the seed investments were small and that company wanted to bring on a second partner that was as large as Accel.
The funds will go towards hiring and marketing for the two-year-old company. Since the site launched, BaubleBar grown by word of mouth and social media outreach without the help of much marketing. “We’re just starting to tap into (marketing opportunities) and think through that,” Yacobovsky says. She wouldn’t discuss what kind of growth the company has experienced to date except to tout the site’s high repeat buy rate. The average customer buys again within a month of her first purchase on the site, and more than half of BaubleBar’s customers repeat three times in the first six months of joining, she says.
The company’s value proposition is in its prices: BaubleBar sells its high quality jewelry sourced from designers at prices between $20 and $120, with many of its pieces retailing below $40. Yacobovsky says the company’s “inventory-lite” model means BaubleBar is more efficient than its bricks and mortar competitors.
The trick is that most shoppers are brand-agnostic when it comes to jewelry. (Of course, this is for the lower end of the jewelry market–BaubleBar doesn’t compete with Harry Winston or Tiffany’s, for example.) Because brand affinity in jewelry is low, a big buyer like Macy’s “spreads the buying love all over the place,” Yacobovsky says. Department stores and chains see jewelry as a margin game, not a volume game, so they buy from 1000′s of small jewelry designers, not committing to large volumes with anyone and therefore not developing a strong relationship with them. And the terms aren’t great.
Yacobovsky and co-founder Amy Jain discovered that designers were unhappy with the industry’s distribution system while they were in business school. That’s where they met–Yacobovsky was previously a private equity pro at American Capital and Jain an investment banker at Centerview Partners. They spend their entire second year meeting with more than 550 jewelry designers to better understand the market they’d be entering. Once they graduated, they created BaubleBar to be as designer-friendly as possible. The results have paid off: Every designer that BaubleBar has ever started working with is still working with the site today, Yacobovsky says.
“Our secret sauce is our network of suppliers and our relationships with them,” she says.
Now with a proven business model and $4.5 million in the bank–the round closed this Spring–the 25-person company has capital to grow.