Shoes of Prey announced today that it has just closed a further US$5.5 million in Series A funding to help accelerate its next chapter of growth and expansion across the US market. The round was led US based Khosla Ventures; and other investors of note include Andy Dunn, Co-Founder and CEO of Bonobos, David Spector, Former Partner at Sequoia Capital, and Heidi Zak, Co-Founder of ThirdLove. There were also existing investors who that put money into this round including Blackbird Ventures, Mike Cannon-Brookes (Co-Founder of Atlassian), Bill Tai and Southern Cross Venture Partners.
The startup was founded in 2010 by Jodie Fox (CCO), Michael Fox (CEO) and Mike Knapp (CTO), and in less than four years has started to change the face of online retail across the country with many iterations of the ‘create your own’ style shopping experience starting up all over the country across various product verticals including sunglasses, swimwear, handbags and suits. Some, like tailor-made suit startup Institchu has been able to emulate the success that Shoes of Prey have demonstrated, and others have not.
The key to this seems to be a solid back-end infrastructure, something which Shoes of Prey has always concentrated on getting right from the beginning. This has enabled the company to reach multimillion dollar revenues within two years and expand to a staff of 75 across six global offices.
The company is truly an end-to-end play nowadays; it opened its first dedicated factory last year to ensure that the rate at which they were scaling was within their complete control and that service levels remained at the height that they were. The team is in the preparation phase of opening a second facility that will have five times the capacity of the first, enabling them to keep up with the output needs that growth requires them to.
As an indication of this growth, Shoes of Prey claims that this year it has sold 50% more shoes than it did in 2013; and plans for next year include adding more customisable combinations to its already 3 trillion design options available.
As reported previously, Shoes of Prey is unique in the online retail world, due to its dual tech / bricks and mortar approach which has seen the company close some very significant strategic partnership deals both in Australia and across the United States. These deals include boutiques in Sydney like the David Jones department store and Nordstrom’s Bellevue store which opened late last month. The Nordstrom deal, which is also an exclusive deal, is a critical part of the US expansion, where Shoes of Prey will be rolling out across a further five stores in the next year.
One of the reasons that larger retailers are finding relationships like the one with Shoes of Prey so attractive is because it creates a different level of engagement with the customer, and blends the online and bricks and mortar experience together. Perhaps the biggest win for department stores though, that judge brands within their space on a ROI based purely on revenue per square foot, Shoes of Prey has proven to be quite an attractive option given: (a) the fact they don’t sell ‘stock’ per se and therefore don’t carry any real significant inventory in its space; (b) the variety attracts a higher return rate of customer; and (c) they only need a small boutique space to operate from. All of these combined mean that, like it has in the Sydney David Jones store, Shoes of Prey delivers a higher income per square foot to department stores.
A noteworthy aspect about this recent funding round is the two Silicon Valley heavyweights that have now become part of the Shoes of Prey family. Vinod Khosla, founder of Khosla Ventures is extremely accomplished in transforming tech companies and leading them towards an exit or IPO. Andy Dunn is the co-founder of Bonobos, which plays in the ‘create your own’ space across the men’s fashion vertical.
Dunn’s business, which currently has revenues in excess of US$40 million, has a very similar model to that of the road Shoes of Prey is venturing down. Already Dunn has set up a number of small experiential retail stores which he said have been the company’s most profitable acquisition tool to date. He also has a similar deal with Nordstrom for Bonobos; and his relationships across the high-end fashion space will certainly come in handy as Shoes of Prey looks to enter further into this space across the States.