Seattle VC firm Madrona buys into men's custom suit website Indochino
Indochino, an online seller of men's affordable, made-to-measure suits based in Vancouver, B. C., relied on word-of-mouth advertising and less than $1 million in financial backing to attract customers during its first three years of business.
Seattle Times business reporter
Indochino, an online seller of men's affordable, made-to-measure suits based in Vancouver, B.C., relied on word-of-mouth advertising and less than $1 million in financial backing to attract customers during its first three years of business.
Now, it hopes to enter a new growth phase with $4 million in financing led by Seattle's Madrona Venture Group, an early investor in Amazon.com and Nordstrom.com. It currently manages nearly $700 million.
Privately held Indochino, which introduced its website in fall 2007 and sells exclusively online, has tailors in Shanghai who make men's suits based on measurements that customers provide themselves.
Here's how it works: A series of online videos shows customers how to take their measurements in about 15 minutes. Most prices range from $300 to $500, and delivery is promised within two weeks. If the fit is off, Indochino reimburses customers for $75 of local tailoring costs. And if it's still not right, they can send the suit back for a redo or refund.
"For a long time you've been able to go to Savile Row in London and buy a $2,000 custom suit. But what percentage of the population can a) fly to London and b) pay $2,000 for a suit?" said Madrona partner Scott Jacobson.
While Jacobson said he believes Indochino will become "a great brand over time, the early bet is that people care more about how they feel and look than what the label says on the inside."
Indochino can sell custom suits for less than many traditional retailers because it cuts out the middle man and is not saddled with the expenses of a physical store, said co-founder and Chief Executive Kyle Vucko.
"When you buy a branded suit, you're not just buying a suit. A certain amount of money is going to pay the store rent, the salespeople in that store, and a global marketing campaign," he said. "When you buy a suit from us, you're just paying for a suit."
Vucko and Indochino's Singapore-born president, Heikal Gani, came up with the idea of selling men's custom suits online while studying at the University of Victoria in British Columbia. They wrote a business plan and snagged an investment from Hannes Blum of web-based bookstore AbeBooks, whom they met through a university mentoring program, as well as two of his colleagues.
Eventually, they also attracted backing from former Yahoo! President Jeffrey Mallett, now Indochino's chairman.
Vucko won't divulge Indochino's financials other than to say it topped $1 million in annual sales in 2009 and more than tripled its sales in 2010. It has 20 employees in Shanghai and 10 in Vancouver.
He said Indochino will use the new round of financing, which includes an undisclosed amount from Burda Digital Ventures, to expand its management team, advertise online, invest in new technology and bolster its back-of-the-house operations.
"We don't see why buying your entire wardrobe online can't be as easy as buying music on iTunes," Vucko said.
Amy Martinez: 206-464-2923 or firstname.lastname@example.org
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