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Subscription Startups on the Rise Again

Subscription Startups on the Rise Again
December 8, 2020

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Photo credit: Ipsy

Although subscription e-commerce has been around since the early 2010s, subscription services have skyrocketed in popularity during COVID-19. The top of mind services is dominated by content platforms like Netflix and Spotify to the product subscription services offered by everywhere from Amazon to Target. But the pioneer of modern subscription boxes can perhaps be credited to Birchbox who offers personalized beauty product samples for a monthly fee, in turn, to upsell for full-size products on their platform. Fast forward 10 years since Birchbox was established, we have subscription boxes for just about every imaginable thing

Meal subscription boxes

The meal subscription trend has definitely been accelerated by the pandemic. As people were forced into lockdown, many turned to meal kits or prepared meal options, not only to avoid grocery shopping but also because other options like takeout were limited as the coronavirus scare caused many restaurants to shutter. 

  • Hellofresh started in 2011 out of Berlin, Germany, and is a weekly meal kit provider. In November, it acquired Chicago-based Factor 75, another subscription service that delivers chef-prepared, ready-made meals. 
  • Freshly is a subscription-based service like Factor 75 that focuses on prepared meals. Born out of New York in 2011, the company won the heart of its previous investor Nestle and was acquired by them for $1.5BN in October signaling a more competitive landscape for private and smaller meal-subscription providers. 
  • Blue Apron is another well-known meal-kit startup that IPO-ed in 2017. Despite its popularity, the company had been plagued with continued losses and had considered an exit strategy by selling to another buyer. However, the pandemic and newfound demand have helped it recover and they have decided to continue to do business alone.
  • Yumi is not exactly a meal-kit but it does a great job of targeting millennial parents with subscription baby food. As the baby food market continues to grow, the company is challenging big names like Gerber. 
Beauty subscription boxes
  • Ipsy, a competitor to Birchbox was launched in 2011 by YouTuber Michelle Phan and similar to its competitor offers a monthly shipment of personalized makeup and beauty products to its members. It has continually grown YOY with its latest success through the acquisition of makeup box rival Boxycharm in a $500MM deal. 
  • Harry’s, is the male version of beauty subscription boxes and focuses on delivering razors and personal grooming products for men. It was set to exit through an acquisition by Schick razor maker Edgewell Personal Care but was blocked by the FTC in February. 
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[The Guardian]
Since last week, PrivCo has added:
1028 Companies | 129 Funding Activities | 212 M&A Deals

Funding & Deal Highlights:

Space Perspective raised $7MM from Prime Movers Lab and Base Ventures
Aerospace and Defense • Seed • Orlando, FL

Fylamynt raised $6.5MM led by Gradient Ventures
AI Software & Internet Services • Seed • Mountain View, CA

Supergreat raised $6.5MM led by Benchmark
Community Software & Internet Services • Round A • New York, NY

Welcome raised $6MM led by Firstmark Capital
HR Software & Internet Services • Seed • New York, NY

Wellory raised $3.0MM led by Story Ventures
Lifestyle Software & Internet Services • Seed • New York, NY

Orbit raised $4MM led by Andreessen Horowitz
Developer Software & Internet Services • Seed • San Francisco, CA

Soil Connect raised $3.3 led by Heartland Ventures
PaaS Software & Internet Services • Seed • Hauppauge, NY

Race Rock Group acquires Structural & Steel Products
Industrial Products • Acquisition • Fort Worth, TX

Nexus Capital Management acquires Natural Balance, a premium pet food company
Real Estate • Acquisition • Burbank, CA

Flutter Entertainment acquires the remaining 37% of FanDuel
Software & Internet Services • Acquisition • New York, NY

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