CHICAGO (MCT) — BloomNation, a Los Angeles-based floral delivery startup that wants to give local florists an alternative to the large national networks that dominate the industry, is launching in Chicago with fresh capital from local investors.
The company placed third in the 2012 New Venture Challenge competition held annually by the University of Chicago Booth School of Business. Kevin Willer, now a partner at Chicago Ventures, was a judge at that competition, and his firm is among the investors putting $1.65 million into BloomNation.
The investment round, announced Thursday, also included Andressen Horowitz, Spark Capital, CrunchFund and L.A.-based startup accelerator program MuckerLab.
The New Venture Challenge judges "really liked them a lot," Willer recalled, but there were concerns that "the flower business is a really tough business." Incumbents such as 1-800-Flowers and Teleflora have nationwide networks of local florists that fill and deliver orders, making it difficult for an upstart to get a foothold in the industry.
BloomNation co-founder and Chief Executive Farbod Shoraka said local flower shops pay monthly fees to be part of the big networks, which also take a commission that can be up to 50 percent of each order.
The local florist also doesn't get any brand recognition because "they're just order fillers," he said.
BloomNation makes money by taking a 10 percent cut of each floral arrangement sold through its platform, with no monthly fees or contracts. The website also uses a model, similar to online craft marketplace Etsy, with shoppers browsing designs identified as coming from individual florists. In addition, BloomNation's technology allows floral designers to take a photo of their finished arrangement and share it with a customer before it is delivered.
The startup has signed up more than 2,000 florists around the country but is looking to do a more deliberate roll-out in Chicago, which represents its second major launch city after Los Angeles. Shoraka said BloomNation has about 10 local flower shops on its network and is looking to have 30 to 40 by the end of 2014.
Willer said Chicago Ventures liked the startup's grassroots approach to recruiting floral shops, giving "them another option to build their business. That message has resonated."
BloomNation faces several other new players in the floral industry. New York-based H.Bloom, for example, offers a subscription service for high-end, custom floral arrangements and has a studio in Chicago. TheBouqs, a California-based online floral delivery service that says it ships its blooms "straight from an active volcano" in South America, has raised money from investors including Brian Spaly, the CEO of Chicago-based men's shopping service Trunk Club.
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