Online retail start-up The Iconic raises another $25 million in funding – StartupSmart
Finn Haensel, co-founder of The Iconic, had reason to sound chirpy on the telephone this morning after just announcing a $25.2 million investment in the online fashion retailer from US-based venture capital firm Summit Partners.
Haensel won’t disclose the size of the stake Summit Partners has taken in The Iconic but says it is “a significant stake which is close to being a majority stake”.
Summit Partners has almost $US15 billion under management and Haensel says the online fashion retailer will use the funds to pursue a more aggressive growth strategy.
“We actually had already secured funding for our growth plans even before the investment, but we were funded for a relatively conservative growth plan and now we can invest more in buying stock and doing customer acquisitions,” he says.
The Iconic has been recording 20% growth month on month and Haensel says while he expects growth to flatten over winter, next summer the online retailer is expecting “double digit monthly growth” again.
Haensel says The Iconic’s website is recording 180,000 visitors a day and over Christmas this peaked to 300,000 a day.
He won’t disclose the number of orders The Iconic is recording but says it has “probably tripled” from last year, when the site was recording more than 1,000 orders a day, to 3,000 orders a day.
“We are still growing traffic but what is growing more is our conversion rate, so the amount of people who are going to the website and actually buying,” says Haensel.
He also won’t comment on the value of the site’s sales, only to say it is “higher than” estimates last year of $10 million a month.
The latest funding follows a $20 million investment by JP Morgan in September last year and sees Summit Partners join major shareholders Rocket Internet and Swedish fund Kinnevik and four of the original five co-founders: Haensel, Adam Jacobs, Cameron Votan and Andreas Otto.
The co-founders were all working at McKinsey and Boston Consulting Group when they were approached by online incubator Rocket to start up The Iconic but original co-founder Ryan Tuohy has since left The Iconic to move on to another venture.
It’s been a rollercoaster ride for Haensel, who says The Iconic has been able to capitalise on the second wave of eCommerce.
“Ten years ago people would have said they only buy online because of price, so the first wave were sites like Catch Of The Day, but the second wave of ecommerce is more about convenience,” he says.
“Sometimes we are cheaper than the bricks-and-mortar retailers like Myer and David Jones, sometimes we are the same price but the reason people shop with us is it is more convenient.”
Haensel has seen more people shopping “24/7” from wherever they are on their mobile and using The Iconic’s three-hour delivery service, which is offered in Sydney and will be launched in Melbourne this year.
“People are willing to spend more money now: 90% of our three-hour delivery goes to offices when people have their 10am coffee break and they order from the office for something to wear that evening,” he says.
Scott Collins, managing director and head of the Summit Partners London office, said in a statement the venture capital firm was looking forward to participating in Australian online retail.
“We seek to invest in companies that build long-term value, and The Iconic has shown dynamic growth in a short period of time,” he said.
This story first appeared on SmartCompany.