Nasty Gal, a site dedicated to selling "badass", "unapologetically sexy" female fashion, has picked up a cool $40 million Series B round from Index Ventures, just five months after the VCs were the sole backers in its first, $9 million round. The LA-based company — which had sales of $28 million in 2011, is on track to make $128 million in 2012 says Forbes, and is currently on a growth curve of 10,000% (yep!) — says it will be using the funds to expand in every way that it can. Investments will be made in technology, operations (including a 500,000 square foot fulfillment center in Louisville, KY and a 50,000 square-foot office space), manufacturing, creative production — and preparing to go global.
Global is not a goal too far for Nasty Gal, which says it already has a customer base of 350,000 people across 60 countries. Already, the company says that 35% of its sales are coming from outside the U.S. It's also not too much of a surprise, given that Index has its roots in Europe and has a strong track record on investments with a global remit.
There are a bunch of fashion sites that are picking up investment at the moment: among them, JustFab raised $76 million; Russian buying club KupiVIP picked up $38 million; fashion aggregation site Lyst took $5 million; and India's Freecultr got $9 million from investors including Sequoia. And there are those rumors about Fancy being a target buy for one tech giant with a lot of money to spare. In all of these cases, the idea is to scale up and seize the moment as women (and men, but mostly women) increasingly flock to the web for their fashion fix.
This is what Nasty Gal is doing, too. But where it is perhaps set apart most from the others is in its focus on a look that speaks to a kind of high-fashion street style that is many avenue blocks away from the Gap, and a much closer to neighbor to UK fixtures ASOS and Top Shop.
Another is how Nasty Gal has continued to adhere to the one-off, second-hand clothles curation that helped founder Sophia Amoruso first make her name on eBay. These vintage pieces now site alongside a much-bigger range of clothing that Nasty Gal sources largely in LA. (This long piece in the LA Times notes that some 70% of the collection is made in Nasty Girl's own backyard.)
As with any fashion e-commerce company that is going places, Nasty Gal is leaning heavily on social media to grow its business — an easy sell, given that its target customer base, 18-24 year-old females, matches up perfectly with some of the most dedicated, regular users of social media. Nasty Gal has 470,000 Facebook fans, 57,000 Twitter followers, 321,000 Instagram followers, and a "growing base" of Pinterest users.
It was its social media cred — and sticking to its straight-pricing guns — that brought Nasty Gal to Index's attention, giving the VC hope that Nasty Gal will soar amongst many other would be fashion e-commerce stars.
"Until Nasty Gal, we hadn't seen a fashion retailer with such a deep understanding of social commerce," Danny Rimer, a Partner at Index Ventures, said in a statement. As part of this latest investment, Rimer has joined the board of Nasty Gal. This looks to be the most sizeable investment yet made out of the $442 million (€350 million) investment fund announced by Index in June.
So what will come next? It sounds more likely to be about leveraging social media to grow its ubiquity and engagement and less likely to be about any of the marketing services that have been the cornerstone of growth for other fashion e-commerce sites. The LA Times article noted that Nasty Gal "wasn't resorting to gimmicky retail tactics like daily deals, monthly subscriptions or Hollywood partnerships." (These are services we see across many of the other leading fashion e-commerce sites.)
"Girls are really addicted to the website and the clothes," Rimer told the LA Times. "It's more challenging to build a long-term business model based not on discounting and on celebrity endorsements, but rather just the quality of your product."
Coco Chanel once said that in order to be irreplaceable, one must always be different, and that goes just as much for the world of technology as it does for fashion. Time will tell if Nasty Gal will be the one to prove it on both counts.
Nasty Gal is the brainchild of Sophia Amoruso who started the company in 2006 on eBay selling one-of-a-kind vintage clothing. Sophia sourced, styled, shot, and shipped her sartorial pieces to tastemakers worldwide on her own. Amoruso was an early e-tail pioneer in the social media arena, using word-of-mouth and social platforms exclusively to build her brand and communicate with customers and fans. Nasty Gal has grown over 500% each year since its inception and counts over 150,000 customers in...
Index Ventures is a leading venture capital firm specializing in investments in information technology and life sciences companies. The firm invests in seed, early and growth stage start-ups across US and Europe. Since its inception in 1996, Index Ventures has backed visionary entrepreneurs who have taken on incumbents and built seminal companies in a number of growth sectors including: open source software companies such as MySQL, Trolltech, Zend and Pentaho; broadband and VOIP companies such as Virata, Skype, FON and...
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