Custom apparel company CustomInk just raised a whole lot of money, bringing on $40 million from Revolution Growth, the investment fund from Steve Case, Ted Leonsis, and Donn Davis. Along with the funding, Leonsis will join the company's board as it seeks to expand and go after new opportunities.
This isn't your usual tech startup funding story. Founded nearly 14 years ago by a bunch of friends who had gone to school together, CustomInk was built to scale the world of custom printing on the Internet. Raising just $600,000 to get off the ground, it survived the first dot-com crash and, after some time, even flourished.
The bootstrapped company was successful in part because the custom shirts its users ordered were for groups, teams, and causes that they were affiliated with. The result was that they would return whenever they needed to do another printing or were organizing around something new.
“We found out early on that the things people were ordering were pretty special,” CustomInk CEO and co-founder Marc Katz told me by phone.
As a result, CustomInk has seen its core business increase to nearly $200 million in annual revenues, and it continues to flourish, with year-over-year growth of 50 percent. To reach that number, it's delivering more than 20 million custom t-shirts a year, and there's plenty more room for CustomInk to grow. Custom apparel, after all, is a $5 billion business today, of which the company has only captured a small portion.
Based on its current growth and revenue numbers, you wouldn't think that CustomInk would even need funding. And, in fact, it doesn't. When Revolution Growth co-founder Ted Leonsis first approached Katz about doing a deal, the co-founder was reluctant to bring on outside capital after already building what is a pretty successful and scaleable custom printing business.
It took about nine months to change Katz's mind, according to Leonsis, who was drawn not only by the huge market opportunity, but by CustomInk's viral and organic growth. He was also impressed that the average order size and the number of return users who come back to the platform each time they needed custom shirts printed.
More than just adding fresh capital, CustomInk gets the benefit of adding Leonsis to its board. “I'm a big believer in the value-added board member,” Katz told me.
Leonsis, of course, was a longtime executive at AOL, holding roles that include vice chairman and president during the 13 years he was there. More recently, he's joined the board of major companies such as American Express and Groupon, where he currently sits as chairman.
As Katz said, “A mentor is someone whose hindsight can become your foresight” - a description which is apt for someone like Leonsis, who has immense background in helping to grow and run consumer Internet businesses. That experience will come in handy the company goes after new opportunities.
In addition to CustomInk's core business, it's also going after two new growth opportunities. The first, called Booster, is a platform designed to help users raise money for charities, causes, and other projects. Booster users will sell custom T-shirts to other supporters, with proceeds from the sale going to the cause they choose.
CustomInk is also working on a sponsorship platform called PearUp that will enable brands to back various groups and occasions. Imagine, for instance, if brands had the opportunity to sponsor the custom shirts worn by local sports teams or at various charity events.
In addition to the new business opportunities, CustomInk also plans to ramp up production and expand its core business. The company now employs 800 employees in three facilities across the U.S., with one in Northern Virginia; another in Charlottesville, Va.; and a third in Reno, Nev. It has plans to expand all of those facilities over the coming months, and plans to add a fourth office in Dallas.