Maveron likes to place bets on new consumer-oriented startups. Those range from sandwich shops (Potbelly) to pet insurance (Trupanion). Now, the Seattle venture capital firm led by former investment banker Dan Levitan and Starbucks’ Chief Executive Howard Schultz is expanding its focus to women’s handbags.
The firm has led a $3 million investment in Gigi Hill, a Yorba Linda, California startup which designs and manufactures handbags and then sells them through in-home parties. In addition to Maveron, Blue Nile and Zulily founder Mark Vadon has invested as has Trinity Ventures.
As a result of the deal, Jason Stoffer and Clayton Lewis of Maveron have joined the board.
We’ve certainly seen a lot of activity in Seattle related to the sale of women’s handbags, namely through startups such as Avelle and Bonanza.
But Stoffer tells GeekWire that Gigi Hill is very different from those offerings, in part because it uses a sales model similar to Tupperware or Avon. Gigi Hill employs more than 600 sales professionals — mainly moms — who actively tout the handbags at in-home parties.
That’s an interesting back-to-basics type of sales approach in this era of online retailing.
But Stoffer thinks that Gigi Hill — founded by two soccer moms who started designing handbags as their kitchen tables — will deliver.
“Our belief is that if you can use Web-based continuity marketing to continue to sell to customers acquired via house parties, you can build a huge brand with minimal upfront customer acquisition costs,” Stoffer said.
Started in 2009, the company has doubled sales each year since launch. And Stoffer said there’s “huge potential” in selling of goods through multi-level marketing channels. He notes that direct selling jewelry outfits such as Slipada — which sold to Avon for $650 million — and Stella & Dot — backed with cash from Sequoia — are growing fast.
There’s no “major direct selling competitors in the $9 billion U.S. handbag market,” he said.
Some multi-level marketing efforts can employ pushy sales tactics to get their product sold. But that’s not the style at Gigi Hill.
“A Gigi Hill party is a different kind of home party – it’s a fun, social outlet for moms where we let the product really sell itself,” said Monica Hillman, who co-founded the company with Gabrielle DeSantis-Cummings.
Previously on GeekWire: Bob Crimmins starts MoonTango, looks to revolutionize online shopping for women