German custom apparel company Spreadshirt has secured €10 million in funding from Kennet Partners and returning investor Accel Partners, which led an undisclosed round of Series A funding for the company back in 2006. Spreadshirt, which competes internationally with companies like CafePress and Zazzle, was founded in 2002 by graduate student Lukasz Gadowski (currently still acting as Chairman of the company) and has become one of the most significant players in the field of personalization and online ordering of custom goods and clothing over the years.
The company also lets private individuals and commercial organizations set up their own online merchandising outlets as resellers of the Spreadshirt service.
Spreadshirt says the financing will be used to develop its online platform and its push into the North American market, where its two main competitors, venture-backed CafePress (Foster City, CA) and Zazzle (Redwood City, CA) are based.
According to a January company blog post, 1 million t-shirts were sold in 2008 via Spreadshirt. They’re also open about the missed growth estimates put forward at the end of 2007: growth was at 40% for the year instead of the aimed-for 50-80%. As a result, the company was recently forced to do a round of lay-offs and reorganize some of its departments.
(Source: Deutsche Startups)
Typo: Title say $ but the content say €
Oops, fixed, thx!
Cool ! I like it~
Cafepress is somewhat better that this… hope this(funding) will help them improve.
Funny! Don’t you know that Gadowski co-invested in cafe-press.
watch: http://www.team...co-investments/
Why would anyone invest $10m in a knock-off of an existing idea? That’s like investing $10m in a “ebay competitor”. Why even bother?! Also, why do you need $10m to make a website that let’s you make tee-shirts? What are people doing with all this money from web startups? Get yourself a few hundred dollars and a webserver in a colo and you have 60% of your work done for you. People just always want to throw absurd amounts of money at the simplest of ideas that don’t necessitate it. I mean, if you’re a VC and don’t mind buying a bunch of unneeded cruft employees and a bunch of aerons, then go for it… but I’d rather invest my money much more wisely.
Leaving the attacks, this is a good question. First even I wondered but after some thoughts, here is what I think (correct me if I am wrong):
1. about 1MM a year for developer costs (and product manager etc
2. about 1 MM a year for promotions and other expenses
= So it would cost about about $2MM a year. Based on that estimate, 10MM is little more than they need, but in these times it is better to have more money.
Anybody has better idea of figures or how the money is usually used up?
Ravi,
You are way off, keep in mind they are a manufacturing company, that requires specialized equipment and logistical processes in addition to the coding. All that plus R&D can add up quickly.
I paid my mortgage payments several times with funds from online t-shirt shop sales in 2007-2008.
The platform allows the printing company to buy in bulk, it allows the shopkeeper to create designs and set up a store without the need to handle the merchandise. I do graphic artwork and collect a check each month.
Some people buy in bulk at an even lower price and sell the stuff at flea markets, club events and swap meets.
I have never had a return for displeasure at the quality but have had a few returns for different sizes of the same design/item.
SpreadShirts.com sold a million shirts last year.
I am not sure of the figures for Zazzle and cafepress, but they are comparable.
So any agressive questions regarding the validty of the concept are unfounded and based on a limited knowledge of retail sales.
Actually he became a cafepress investor / shareholder by accident – he invested in a small startup (forgot the name, sorry) which was later acquired by cafepress and he thus ended up being a part-owner of cafepress…
Spreadshirt also bought:
http://www.lafraise.com
which is really good. The first that did the model with votes determining which graphic is going to be released on the next Tshirt. Very limited impressions and a huge community, the perfect business case for web2.0.
That enables them to run co-branded events with brands like microsoft, ubisoft…
@simon
in fact Lafraise was inspired by threadless…
Kudos for Lukasz, he’s a charismatic entrepreneur and now with a filled war chest he’ll be a great PITA for CafePress and Zazzle.
This guy just did what most German Startups do: he copied an American Concept, Either Zazzle or Cafepress, and did the same thing in Germany. Germans are well known for Cloning other people’s ideas. Thats all good, but they shouldn’t pretend like its not true, when everyone knows the truth…thats the annoying thing.
Facebook copied Friendster and MySpace, iPod copied Creative, Windows copied Apple…. everyone copies everyone else but that does not make their business invalid.
…Apple copied Xerox
Wrong. There’s no such thing as an original idea or story. Spreadshirt’s pretty legit in my books and definitely a good service/site.
They seem the same on a superficial level, but CafePress and Zazzle have been expanding into other product categories very rapidly. Spreadshirt has stayed focused on Tshirts and developed a manufacturing process that can yield results that are better than both in certain circumstances.
It’s like the Behringer of custom t-shirt sites…
I got a Chinese review about t-shirt startup, FYR.
http://tech.cip...hp/archives/476
Bluecotton.com’s flash-based Design Studio crushes Spreadshirt, Cafe Press AND Zazzle.
The business model is a little different, but you can still witness the design studio pwnage here.
Remind me why a clothing business needs another $10M in funding?
It’s not like they need to open retail stores to expand, and if they aren’t at least breaking even with 1 million in annual unit sales ($15M in revenue?), then they are already in big trouble.
Wowsers. A million shirts sold in a year?
I wonder what the profit margin per shirt is.
At some point people will run out of closet space though.
From what i’ve heard, most t-shirt sites have large profit margins. threadless is the best imo.
I’d like to develop my own t-shirt or clothing business. I believe, the profit margins on t-shirts are extremely high. Off of an e-commerce site you can generate a ton of sales. 1 Million T-shirts sold
1 Million times $20 per tshirt = 20 Million
20 million isnt ur profit margin tho. you got alot of costs involved that most dont realise until you look into it properly. you need buy the t-shirts, if ur selling 1 million u need 10-15 mil in stock to cover sizes and colours (xs, s, m, l, xl, xxl etc.. ) if not more. You need a warehouse to stock them and u have the cost of printing 1 mil transfers. Then u’ve got alot of staff to pay (warehouse, designers, it ) and all the utility bills. Banks/paypal would take a 3% charge for every transaction. you got servers to add to the costs and the maintance plus setup fees etc..the cost would cary depending on ur setup. but your own clothing business on that scale isnt feasible unless you have alot of capital or use one of the companies mentioned above and take smaller %. Intergrate it into ur own site properly and no one will know that its not ur business.
Hi
I regret to have to tell you this, but that is a myth. I have a t-shirt webshop for over 6 months now, and the revenues have been borderline pathetic. Now if you have loads of funds at your disposal for marketing, that could be different, I wouldn’t know, since our funding is very limited.
Take care
Sal
It would be interesting if you could write an article on different kind of fundings. It is not clear to me, in fact, what is the difference between Series A and Series B fundings.
It’s just a means to express the order, A being the one before B, etc. There are other types of VC funding: http://en.wikip...Venture_capital
Facebook Connect huh? What’ll they think of next.
Yea, nothing like taking candy from babies! Loosers!!!
Congrats, Good for you Spread shirt, keep rockin.
You guys are pathetic. They raised the $10 million just to expand their US business. Their overall annual reveue in 2008 was over $200 million. Better show some respect!
Let’s hope they use it to improve the site because the printing isn’t as great as some of their competitors, but it’s price (free to open a store), and it’s base price is appealing.
Kudas to Spreadshirt, with German working style they should be come the top one.