On The Road To An IPO, Wayfair Picks Up $157M

On the way to an initial public offering later this year, the home furnishing online retail juggernaut Wayfair has picked up $157 million in a new round of funding.

The online retailer is mum about who’s doing what with whom as far the plans for a public offering are concerned, but The Wall Street Journal is reporting that Goldman Sachs, Citigroup, Allen & Co. and Bank of America are on the book.

Cash for the latest round came primarily from funds and accounts managed by T. Rowe Price, the financial services institution that’s been throwing money at venture-backed tech companies like it was a sailor on shore leave. (Surprisingly, it looks like T. Rowe’s good buddy on big deals, Tiger Global Management, sat this dance out.)

After the round the WSJ is reporting Wayfair will have a post-money valuation of $2 billion, which transforms the company from a wayfarer to a unicorn. In fact, with sales of $917 million, the company almost had to file with the SEC.

The new round for Wayfair and a wave of other financings for Boston-based tech companies makes it seem that all the talk about the city’s demise as a hub for great technology investments may have been greatly exaggerated.

According to CrunchBase data Boston’s doing fine, and investments in the city have actually been trending upward.

Wayfair began as a number of discrete online retail sites that were consolidated under the Wayfair brand with a $165 million round in 2012. Investors in the company’s mammoth Series A investment included Battery Ventures, HarbourVest Partners, Spark Capital and Great Hill Partners.

The Boston-based company’s global expansion and huge investment dollars put it on par with other e-commerce giants from around the world that have raised over $100 million.

View the Original article

In A Post-Amazon World, E-Commerce Site Wayfair Wants To Win At Selling Home Goods And Furnishings

Taking on Amazon when it comes to e-commerce can be a futile effort. There are only a handful of e-commerce companies that have successfully been able to build a billion dollar-plus business in e-commerce (without having physical stores) in a post-Amazon world. Zulily is one of those companies. Another one, which has stayed relatively under the radar, is Boston-based Wayfair.

Wayfair, founded by college friends Niraj Shah and Steve Conine in 2002, was born from CSN Stores, and rebranded as Wayfair in 2011. Shah and Conine are serial entrepreneurs, having sold their first company, Spinners, to XML in 1998.

What’s impressive about Shah and Conine’s company  is that it has quietly been able to create a solid, $1 billion business around selling home goods and furniture online and will likely IPO in the next year or so. Instead of appealing solely to a high-end market, Wayfair focuses on the mid-market, competing with the Macys, Overstocks, Target, Bed Bath and Beyonds of the world. In addition to the Wayfair.com destination, the company also operates a One Kings Lane-competitor, Joss & Main (which focuses on high-end furniture), as well as a modern furniture site (think CB2 or Design Within Reach) called AllModern.

As Shah explains to me, the company hasn’t focused on pursuing massive press attention to flaunt big-name backers, even though Wayfair counts early Twitter backer Spark Capital, Battery Ventures, HarbourVest Partners and Great Hill Partners as investors. In fact, for the forts nine years of operation, the company was bootstrapped. In 2011, Wayfair did decide to raise funding to expand aggressively, and took $200 million from the investors named above.

The site now has 7 million home products available for purchase from a fulfillment network of 8,000 suppliers across 12,000 brands. And Wayfair is seeing $1 billion in order volume, which translates into $900 million in sales for 2013. That’s up from $600 million in sales from 2012.

One drawback to ordering on Wayfair is because of its fulfillment network, and because it is shipping furniture, it can take days or even weeks to receive an item. But unlike Target or Macy’s’ online sites, Shah says, Wayfair actually pays attention to merchandising and has been utilizing technologies such as Pinterest-like inspiration clipboards, and more to help engage consumers. In fact, the company employs over 300 data scientists and engineers to help use these data points towards increasing personalization and engagement. To be fair, the Targets and Walmarts of the world are starting to realize that design, personalization and technology can only help them increase sales, but these companies tend to move slowly.

Home and furnishing spend is a $200 billion market in the U.S. alone, and only five percent is this spending is online. As e-commerce continues to grow, Wayfair’s share of this will too. Right now, Shah estimates that Wayfair has around one percent of all home furnishing spending online. Amazon has expanded into new territories like fashion, wine and grocery, but he isn’t afraid of e-commerce giant growing into the home furnishings territory (via Amazon’s Quidsi acquisition, it operates a home furnishings and supplies site Casa.com). In fact, Shah believes that home furnishings, jewelry and fashion are the only areas in e-commerce where there is room for a number of large companies. That’s because, he explains, the consumer is looking for uniqueness in these categories vs. electronics, books, household supplies, grocery and more.

With the company’s growing sales, it’s of no surprise that Wayfair was one of the companies invited to present at Goldman Sachs’ Private Internet Company Conference in Las Vegas in November. Many of the companies invited to present are the ones bankers want to keep their eye on–and potentially represent in a public offering in the future. For Wayfair, an IPO may not be too far off.

Shah has been open about his intentions to go public. The company also recently brought on former Warner Music Group Chairman Michael Fleisher as CFO.

It’s clear that 2014 will be a pivotal year for the company. Investors will be looking for continued growth, and other large retailers will trying to up their technology game to increase their share of online dollars spent on home furnishings. But for a company that was relatively unknown two years ago, Wayfair’s growth and ascent is impressive. Stay tuned.

View the Original article