News
Thriving etailers attract private equity interest
While abundant anecdotal evidence shows that banks are still not lending to small businesses like they did before the recession, private-equity interest in the multichannel retail sector appears to be on the increase—seeing potential in those businesses that are reporting strong growth even in today’s volatile economic environment. For example, in June, Isis Private Equity invested £4 million in
GettingPersonal.co.uk, an online retailer of personalised gifts. The deal, funded by Baronsmead VCTs, backs founders John Smith and Giles Harridge in their plans to grow the business by investing in product development and marketing. For the year ending April 2010, GettingPersonal’s turnover was £9.6 million, an increase of 52 percent on the previous year. Rapid growth at
My-Wardrobe.com is also attracting investment. Launched in April 2006, the luxury-fashion etailer reported a 93 percent like-for-like increase in sales to £8.3 million for the 12 months to March 2010. There has also been a 110 percent like-for-like growth in visitors to the site since 2009—from 2 million to 4.2 million, and a significant increase in international traffic. In July, My-Wardrobe raised £6 million via an investment round led by Balderton Capital. The money will be used to extend My-Wardrobe’s product offer, as well as fund its expansion into international markets. Another business, E-Trader Group, operator of online fashion site
Koodos, secured a £2 million investment from existing backer MMC Ventures to support its future growth. Receiving £7.5 million from its backer Index Ventures, which was joined by Greylock Partners for the series C funding round, is online marketplace
Notonthehighstreet.com. The business, founded by Sophie Cornish and
Holly Tucker in 2006, is on target to grow by at least 100 percent in 2010. The investment will be used to expand the team, enhance the website and invest “other initiatives”. A new website went live in August offering a more personalised shopping experience to customers, including showing recently viewed items, an advanced search facility, customer reviews, and a dynamic shopping-basket feature that shows users the contents of their shopping cart when hovering over it with the mouse cursor.
Other alternatives Venture capital is not the only route etailers can take to raise cash.
Private-sales website
SecretSales.com secured a second round of funding from German secret-sales site Brands4Friends. Without disclosing the level of investment, SecretSales chief executive Nish Kukadia said the capital will be used to “accelerate the growth of the business by opening more marketing channels, augmenting the technology infrastructure and bringing on board some key hires”. These include the appointment of John McKenzie, who joins from competing site BrandAlley as associate buying director. Brands4Friends initially invested in SecretSales in February this year, but upped its stake following strong growth. The most novel fundraising idea is undoubtedly Hotel Chocolat’s
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chocolate bonds. It raised £3.7 million in July from the sale of its chocolate bonds to its most loyal customers. Instead of paying interest in cash, bondholders will receive free boxes of chocolate a year equivalent to a 5.38 percent return. The funding paves the way for Hotel Chocolat to invest in its Cambridgeshire factory, create a total of 400 jobs, and create an eco-friendly chocolate factory at its cocoa plantation in St Lucia.
Catalogue e-business
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