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Kim Kardashian's ShoeDazzle wins $40 million in financing

May 30th, 2011 by

Five tips to position your business and bedazzle investors


It's hard to imagine now, but there was a time when online shopping didn't exist. Yes, that's right little Virginia, and we couldn't even take photos with our cell phones and - there was no such thing as texting. Weird, right?

Back in those prehistoric days, the first online shopping sites were scoffed at by investors approached by daring and forward-thinking entrepreneurs. "Women won't spend money on clothing or shoes they can't try on," the naysayers said. Oh, how they underestimated us.

Pioneers like Natalie Massenet of Net-A-Porter and Nick Swinmurn of Zappos proved the negative nellies wrong and now thousands of online retailers have proliferated all over the world wide interweb. These days, if you're not online, you're nowhere.

The latest in online success stories comes from celebrity socialite and reality television star, Kim Kardashian. Kim is the co-founder and chief fashion stylist of two-year old ShoeDazzle.

The company is subscription based; once you make your first purchase of $39.95, you are a member and expected to buy another item for $39.95 each month. In return, ShoeDazzle will email you a monthly selection of shoes, handbags or jewelry based on your selected preferences (including which celebrity closet you covet the most). You can then choose items that will be mailed to you, wrapped up in pretty packaging and ribbons, or bank your monthly fee in exchange for credit.

With three million subscribers in the US and Canada, ShoeDazzle has been an instant hit. The venture capitalists who once claimed it could never happen, are lining up to pour money into the company.

To date, ShoeDazzle has raised $60 million, two-thirds of which came last month in a $40 million infusion from a consortium of investors led by venture capital firm Andreessen Horowitz. (As in, Marc Andreessen, founder of Netscape and board member of Facebook, eBay and HP. Oh, that Andreessen.)

ShoeDazzle says it will use the money to expand into the UK, Asia and South America. They also plan to introduce more product lines and grow their team of 135 employees.

What makes an online business such as ShoeDazzle attractive to the big-time investors? According to the partners at Andreessen Horowitz:

  1. A strong business model

    Brush off that business plan; it's not merely an exercise. Demonstrating on paper the strength and opportunity of your market and your sales strategy is the first step to piquing an investor's interest.

  2. Fashionable, on-trend products that appeal to a growing customer base

    As in life, timing is everything. If you can leverage current events and social media, you have a better chance of remaining relevant in a world of 20-second attention spans.

  3. Smart inventory management

    Online retailers often find this is one of their biggest challenges. Filling orders and managing the flow of your products is essential, particularly if the popularity of your site takes off faster than you expected.

  4. Direct sourcing of products

    Eliminate the middle man whenever possible to prevent eating away at your sales margins. If you sell someone else's brands, you only get a cut of the action and if there's a problem with that company, it will affect your reputation. By producing or sourcing products yourself, you can stand by the quality of your products, while passing on lower prices to your customers.

  5. Most importantly, make a profit!

    The bottom line is the bottom line. Investors are far more interested in parting with their cash to help a successful company become more successful, rather than giving money to a not-yet profitable company and counting on you for a turn-around. Of course, there are always exceptions (Facebook), so don't lose hope if you're not in the black yet.

And then there's Kim...

These tips can help position almost any business in a good light when looking for financing. However, we can't help but think that maybe a super-hot, high-profile celebrity spokesperson, like Kim, can't hurt either.


Jul 26 2017 7:28pm

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