As subscription e-commerce startups have proliferated, targeting everything from apparel to pet care to leisure activities (as detailed in our subscription market map), their fortunes have also diverged: JustFab looks headed toward an IPO, while Unilever just made waves with its recent acquisition of Dollar Shave Club for $1B. Still others, like BeachMint, have failed.
Are investors once again buying into the recurring shipments model? We used CB Insights data to put numbers to the trend. Funding to subscription e-commerce startups has been erratic over the past five years, however, Q2’16 saw deals increase for the second consecutive quarter to a five-year high. If deals continue at their current rate, 2016 full-year deal count may grow 40%+ to a new peak.
We define e-commerce subscription companies as startups delivering nonperishable goods to customers’ doors on a predetermined schedule.
Quarterly subscription e-commerce funding trends
Subscription e-commerce startups attracted 19 funding rounds in Q2’16, up from 12 the prior quarter and 9 in Q4’15. Q2’16 also tied Q3’15 for peak deal volume, however total funding came in well below that quarter’s total.
Quarterly funding increased to $98M, driven by a $60M Series C to BarkBox. “Geek gear” subscription service Loot Crate earned the second-largest deal in Q2’16 with its $19M Series A, followed by an $11M Series A to Shanghai flower service FlowerPlus.
This is a notable jump from Q1’16, when the largest deal was a $3M seed round to Lola, a subscription tampon service.
Quarterly funding peaked in Q3’15, powered by large deals to several of the sector’s most well-funded companies. (See the full most well-funded list below.) Q3’15 saw a $100M Series B to Ipsy, a $100M Series D to The Honest Company, and a $76M Series C to Harry’s.
No other company raised more than $10M that quarter, illustrating a concentration of dollars at the top.
Annual subscription e-commerce funding trends
Subscription deals are on the rise this year; the first half of 2016 alone saw almost as many deals as all of 2014. However, dollar funding is lagging with just $110M poured into the sector this year so far. The prominent companies that boosted funding totals in 2014 and 2015 — such as JustFab, which raised $85M in 2014, or Harry’s, which raised $140M in 2014 and $76M in 2015 — have not yet raised rounds in 2016. In fact, the average deal size has decreased from roughly $16M in 2014, to $10M in 2015, to just $3.5M in 2016 to date.
Most well-funded subscription e-commerce startups
The most well-funded subscription e-commerce startups backed by VCs mainly focus on beauty and grooming. Our top ten list includes one shaving company, Harry’s, and four cosmetics companies, Ipsy, GlossyBox, Birchbox, and Julep Beauty. Prior to its acquisition by Unilever, Dollar Shave Club was on this list as well.
| Company | Total Disclosed Funding ($M) | Select Investors |
|---|---|---|
| TechStyle Fashion Group (formerly JustFab) | $300M | Matrix Partners, Technology Crossover Ventures |
| Harry’s Razor Company | $287M | Harrison Metal, Thrive Capital |
| The Honest Company | $222M | Institutional Venture Partners, General Catalyst Partners, Lightspeed Venture Partners |
| Ipsy | $103M | Sherpa Capital, 500 Startups |
| Birchbox | $87M | Slow Ventures, Accel Partners, First Round Capital |
| BarkBox | $82M | Lerer Hippeau Ventures, Resolute.vc, RRE Ventures |
| GlossyBox | $72M | Holtzbrinck Ventures, Kinnevik |
| Julep Beauty | $60M | Maveron, Andreessen Horowitz |
| NatureBox | $59M | General Catalyst Partners, Softbank Capital |
| Stitch Fix | $47M | Baseline Ventures, Benchmark, Lightspeed Venture Partners |
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