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Originally published Thursday, November 15, 2012 at 7:22 PM

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$85M in VC to boost Zulily’s growth

Zulily, the Seattle online retailer of children’s apparel and toys, has received $85 million in venture capital in a round led by Silicon Valley’s Andreessen Horowitz.

Seattle Times business reporter

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Seattle-based retailer Zulily, a flash-sale website aimed at busy moms, said Thursday it raised $85 million in a new financing round led by Silicon Valley venture-capital firm Andreessen Horowitz, bringing its total funding after three years to $139 million.

Zulily’s valuation in the round was $1 billion.

“The vast majority of purchases come from repeat customers, and we need to continue to surprise and delight them,” Zulily CEO Darrell Cavens said in a statement. “Additional funding will allow us to expand more quickly.”

Zulily said its daily email blasts, which promote temporary discounts on children’s apparel and toys, now reach more than 10 million members, up from a million two years ago.

Over the past year, Zulily took its order-fulfillment operations in-house, opening distribution centers in Ohio and Nevada, while also expanding sales to Europe.

The company declined to disclose sales figures.

“Zulily is one of the fastest-growing businesses we’ve ever encountered,” Andreessen Horowitz partner Jeff Jordan wrote in a blog post. “We believe Zuilily has huge market potential and is well on their way to becoming an iconic e-commerce franchise.”

Andreessen Horowitz, whose investments include Facebook, Foursquare and Twitter, is the VC operation of Netscape co-founder Marc Andreessen.

Cavens launched Zulily in early 2010 with Mark Vadon, his former boss at Seattle Internet jeweler Blue Nile. Vadon, Zulily’s chairman, had just become a dad for the first time, and along with Cavens, a father of two, saw a need for an edited online assortment of baby products.

They started Zulily with $4.6 million in financing led by Seattle VC firm Maveron and soon added $6 million. Last year, Zulily also raised $43 million in a round led by Meritech Capital.

Since its launch, the site has expanded beyond baby products to merchandise for older children and moms, including women’s apparel and housewares.

“One reality in e-commerce today is that you want to avoid trying to compete directly with Amazon,” Jordan said in his blog post. “Zulily does this by aggregating a long tail of talented designers who typically lack extensive national distribution.”

He added that while their products are sold at a discount, these designers “almost always make money on their Zulily sales and highly value the channel.”

In a phone interview Thursday, Cavens noted that Zulily employs more than 500 people at its Sodo headquarters and has about 100 job openings. The new money, he said, will help it continue to hire talented employees.

“This isn’t us taking money so we can make a right turn and do something else,” he said. “This is us focusing on mom and continuing to drive the business forward.”

Amy Martinez: 206-464-2923 or amartinez@seattletimes.com

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