Offering pop-up parties selling shapewear that blends Lululemon style with Spanx support, Ruby Ribbon Inc . has won fresh investor backing to expand nationwide, VentureWire has learned.
The company, which has grown to 100 stylists in 30 states since first crafting the product 8 months ago, closed an $8. 5 million Series B round led by Mohr Davidow Ventures with participation from existing investor Trinity Ventures. Valuation was north of $25 million.
The idea behind Ruby Ribbon is similar to that of jewelry company Stella & Dot, kitchenware company Pampered Chef and other virtual retailers building a national brand with an army of independent sales people who tap their smartphones and social networks to host events. But the Burlingame, Calif. -based startup has a more intimate focus, selling camisoles, slips, pencil skirts and other shaping basics made with a material which sucks in and smooths select body areas.
“There’s a reason why there are two women on the board,” said MDV’s General Partner Katherine Barr, who led the round on behalf of her firm and joins Trinity Ventures General Partner Patricia Nakache as a director. Asked whether it was awkward bringing the deal to her mostly male partnership at MDV to evaluate, Ms. Barr replied it wasn’t.
“I work with a bunch of adults, so there was no snickering,” said Ms. Barr. “Anna (Zornosa) did a good job of focusing on the business opportunity, but yes the guys had to go to their wives” to completely understand how the product works.
Along with enthusiasm for the $100 billion apparel category, Ms. Barr said Ruby Ribbon founder and Chief Executive Anna Zornosa impressed her team with her business acumen and entrepreneurial skills. She also liked the sales model of independent stylists which cost Ruby Ribbon virtually nothing to enlist.
“It’s shockingly capital efficient. In order to scale it doesn’t need much,” added Ms. Barr.
Ruby Ribbon provides Web sites to individual stylists who, after watching a training video and investing about $200 to buy samples of the product for women to try on at parties, set up their own mini-shops. On their Web sites, stylists can order product, track earnings and inventory, plan and manage pop-up parties in living rooms, exercise studios, beauty salons and other sites.
Most parties draw between 6 to 8 women and result in $750 in sales, according to Ms. Zornosa. Stylists, who are paired with a mentor so they can share sample inventory and grow their business in tandem, are paid a higher percentage of each sale as they increase their volume.
For example, stylists earn 20% commission on sales up to $750 and 40% on sales of $1,500 and above.
The recent round will be used to improve back-office functions, adding a gamification layer to stylist Web sites and purchasing more samples in anticipation of bringing on new stylists.
Ms. Nakache said although she had known Ms. Zornosa since she served as an adviser to Trinity-backed Affinity Labs Inc. nearly a decade ago, and had heard good things about her from several startups since, she wasn’t certain she wanted to back her until she saw her in action.
“What sold me was watching her learning curve over those three months” she spent doing due diligence on whether the idea worth her time, said Ms. Nakache. “I watched her network her way into all these industries, develop a core set of advisers and common team. I thought, ‘wow, if this is indicative of her longer-term trajectory then I’m getting on this bus.”
Trinity Ventures, which invested $3 million in Ruby Ribbon last year, also backed retail startups Starbucks Inc ., Jamba Juice Inc . and Blue Nile Inc . and more recently Zulily Inc . and Beachmint Inc .
Ms. Zornosa said her top priority will be ensuring each stylist can build a successful business.
“We’ll be measuring our success based on (each stylist’s) success. When companies stop doing that, that’s when they get into trouble.”