This morning Rebundle, a hair-focused startup based in St. Louis, announced that it has raised $1.4 million in a pre-seed round. M25, a venture firm with a geographic focus on the Midwest, led the funding event. Prior to its pre-seed round, Rebundle had raised what CEO and co-founder Ciara Imani May described as six-figures worth of grant, and other non-dilutive capital in an interview with TechCrunch.
Rebundle creates and sells hair extensions made from plant-based materials. My knowledge of hair extensions is modest, but May walked me through a few key points. First, the market is both large, and varied, with myriad price points from low-cost (plastic-based products), to expensive (human hair). And second, plastic extensions can irritate one’s scalp.
May had a focus on living more sustainably before founding Rebundle, she said, and was aware of the irritation that plastic extensions can cause. What her startup created has the potential to both remove plastics from the product, helping customers’ heads feel better, and limit waste, helping the environment.
To create its product, Rebundle uses banana fiber as the core material in extensions that it sells in a variety of colors. Notably the company is building out new production facilities in the United States instead of offshore.
Manufacturing brings us back to the funding round, which the CEO said will be used to invest both in her team, and her supply chain. Rebundle was selling out of stock in an hour or less before raising more capital, which meant that prior funding sources were too small for it to properly scale. Enter venture capital.
Rebundle is a DTC company, selling its products through its website. I asked May how many times per year someone employing hair extensions might change them out for a new set. She said up to five times per year. This means that Rebundle is selling what appears to be a recurring-purchase physical good through its own channels. The gross margin profile of the extensions market isn’t clear to us at this juncture, but the potential regularity of extensions sales makes Rebundle an interesting business case.
Recall that mountains of venture capital has been invested in the DTC model for products that lacked a recurring hook, an experiment that had mixed results.
On the obvious question of subscriptions to its products, the co-founder demurred to share specifics, allowing only that there is “room to play” with the idea. Extensions customers today, she explained, do not typically buy subscriptions to the product. If Rebundle can scale its onshore manufacturing and introduce a recurring service to its product mix, I wouldn’t be shocked to see the company raise again this year.
It likely won’t need to. The company’s CEO told TechCrunch that her latest round was compiled with a rolling close, but that the capital will provide at least 18 months of runway, and perhaps a little more. So there’s not likely a near-term need for more funds at Rebundle, though not needing money has certainly not slowed many startups from taking on more capital when offered.
Credit belongs to : www.techcrunch.com