Threadflip raises $1.6M seed from VC luminaries

Funds will go toward turning women's closets into boutiques

Financial trends and news by Bambi Francisco Roizen
April 17, 2012
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Remember that impulsive item you bought a while back? A perfect party dress; that must-have necklace; boots you couldn't live without. They looked great at the time, and the thought of buying them merely satisfied this urge to buy something. Admit it. You know that's happened to you. Recently, while I was eight months pregnant, I found myself with a craving for several maternity dresses and blouses. Not even thinking that I'd likely never wear them, I bought them. 

Two months later, I'm stuck with unworn maternity items, with price tags still attached. Like many other women do, I'll likely seek out the next pregnant gal to give them away to. But they're not always easy to find, especially ones who are the same size.

I can always try to sell them on eBay and Craigslist, but the thought of taking a photo, uploading them online, handling the process of payment and then mailing out the items to a buyer seems a bit more of a hassle than a just-given-birth mom wants to deal with. 

That's why Threadflip sounds like a convenient alternative. The just-launched start-up wants to help women recycle their wardrobe so items, like never-used maternity clothes, or shoes and accessories are found by others who appreciate them, leaving more room in the closet for more impulse buys, err, something more useful. The site also helps women find what they're looking for by gathering information of their likes and dislikes, like their favorite colors and styles. 

With early traction, Threadflip has captured the attention of some august venture capitalists. The San Francisco-based start-up announced Tuesday that it's raised $1.6 million in venture financing from First Round Capital, Baseline Ventures, Dave Morin from Slow Ventures, Forerunner Ventures, Greylock Discovery Fund, and Andreessen Horowitz Seed Fund. 

Manik Singh, who founded Threadflip last year, wanted to help his wife do something useful with a pair of expensive boots that she bought, but never wore (a familiar story for many women, I'm sure). "She didn't want to do eBay or Craigslist," said Singh, in an interview with me. "She wanted them to go to someone special. But the barriers of using existing products were too high. So we said that this is a problem that exists for a lot of women."

Out of that problem, Threadflip was born. "There's tremendous potential locked up in the closet," said Singh. "The concept is  we’re enabling women to turn their closets into a boutiques." 

Basically, Threadflip is a virtual consignment store. Much like eBay and Craigslist, women can upload photos of their clothes, shoes and accessories, name a price and sell them. But the difference is in the presentation and services. Firstly, even though many of the photos of the items are taken by the seller themselves, Threadflip encourages sellers to make the photos appealing. The nicer the photos, the more likely they'll sell. Additionally, Threadflip, makes it super easy for women to ship their clothes. Much like Netflix's service provides pre-stamped envelopes to return films, Threadflip will send a pre-addressed box to the seller when an item is sold. So if I sell one of my maternity dresses, I don't have to go to the post office to box it and mail it out. Threadflip sends me a box right to my door.

There's also a white glove service for those who don't want to deal with the hassle of modeling their own clothes, or who don't have a handy manequin hanging around the house (because we all have one of those). The white glove service is even more convenient, as it allows you to send your items to Threadflip and the company displays the item, prices it for you, and ships to a seller.

Threadflip economics

Of course, there is a cost for this service. If you want the regular service, you pay 15% of the selling fee to Threadflip. If you want the white glove service, you'll have to pay Threadflip 50% of the selling price. 

Singh says that fee may adjusted over time for expensive items, since selling a $500 dress on Threadflip and paying $250 commission for the service seems a bit much. Still, if you were to use a traditional consignment store, like Buffalo Exchange or Crossroads Trading Co., you'd be looking at paying a similar fee or upwards of 60%, said Singh. Other online consignment stores charge between 40% and 50%.

Sounds like a very useful idea and the market appears relatively large. In 2009, some $500 million in second-hand clothing was sold, according to a report by HighBeam Business. In the same year, eBay sold more than $7 billion in clothes. To be sure, much of those items were also "new" clothes. 

But it may also be the case that many of the items on Threadflip will be new, just like my unworn maternity clothes. Indeed, Threadflip isn't just catering to women who have old clothes they don't wear any longer. There are also boutiques selling items on their site. Doubtless, over time when Threadflip wants to make real money, it will have to focus on power sellers. It's what happened to eBay when the company had to show growth. But Singh says that he'll always cater to individual women. 

"Most people selling on these platforms are power sellers," said Singh. "We will always have that segment of that market, but truly we want to create a platform where an every-day woman can use the service."

As for how the company plans to get the word out, Singh says that a person is built leveraging Facebook Connect. In this way, when a person sells an item or looks at an item, that action will appear on Facebook so their friends can see it. Additionally, the company is leveraging Pinterest. Each item has a "pin it" button so the items can be shared on the pin-up site. "Pinterest is the No. 1 place that people are sending items out to," said Singh. 

The fashion start-up landscape

Threadflip is just one of the many start-ups emerging in the fashion and clothing cagtegory, a market that's exploded over the last year with large and niche sites alike. In the more niche category, others that have launched and/or have raised funds recently, include Roses & Rye, which raised $700,000 to sell mom-friendly shoes and Style for Hire, which just launched and helps create wardrobes on a budget. A similar wardrobe outfitting site that targets men is Trunk Club, which raised $11 million last year. There's also MeUndies, a site that launched in February to manufacture and deliver underwear. Beachmint, a broader fashion retail site, raised $23.5 million last summer. CakeStyle, which delivers personal fashion to your door, launched in November. Etsy, a site for crafty goods, raised $20 million for a $300 million valuation back in 2010. And, of course there are the larger fashion and broader retails sites that have taken off, like Fab, Gilt Groupe and One Kings Lane.  

Related companies, investors and entrepreneurs

Description: Fab is on a mission to help people better their lives with design. Fab was founded by serial entrepreneur Jason Goldberg in February 2011...
One Kings Lane
Description: One Kings Lane is the only private online sales site solely dedicated to designer home décor. Each day (Monday – Friday) th...
Description: CakeStyle is a personal styling service for busy women that delivers a box of handpicked clothing and accessories to your door each seaso...
Trunk CLub
Description: Trunk Club was started to solve a simple problem – shopping for clothes in stores or online just doesn’t work for most guys. ...
Description: An online basics apparel company.
Roses & Rye
Description: Roses & Rye is a web-driven footwear business dedicated to creating beautiful, Mom-friendly shoes. Celebrated by WWD, People, and ABC...
Description: Threadflip is pioneering a new social shopping experience by offering consumers a simple way to convert closets into unique boutiques and...

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