Backing CustomMade, the marketplace for one-of-a-kind goods
The first investment out of our new fund IX will bring me back to some well trodden stomping ground, and specifically the world of marketplaces, as Atlas Venture leads the new round of financing for CustomMade.
CustomMade is a marketplace for one-of a-kind-goods. Think a custom dining room table in reclaimed walnut or a unique piece of jewelry for your biker girlfriend. The whole idea is to put high quality artisans together with people who enjoy buying a one-off production from a maker who cares.
I am leading this round with my friend Rich Miner at Google Ventures who (smartly) invested previously in the company, alongside some other smart folks like Phin at First Round Capital. I am also truly eating humble pie for passing on the seed and the Series A; I should have gone in earlier. Rapid growth in metrics in recent months pushed me over the line.
Seth Rosen (CustomMade), @fdestin, Jason Jacobs (Runkeeper), Mike Salguero (CustomMade), Rich Miner (Google Ventures), Eujin Raney (Deloitte Consulting and spouse of IDEO’s Colin Raney who’s shooting) at the American Seasons on the side of the awesome Nantucket Conference
I have done my fair share of marketplace investments including PriceMinister (sold to Rakuten for $250M), Seatwave (secondary ticketing leader in the UK) or Zoopla (real estate) and recognized a number of patterns that make marketplaces successful once you crack the code on driving liquidity.
This is one of those opportunities where:
- It’s tough to build liquidity and get a decent supply of makers … which they’ve done
- The buyers and sellers are incredibly fragmented … meaning the service is truly useful
- There is a high value attached to creating trust and mediating payment (since the parties don’t know each other and the average order value is high) which gives you a sustainable business model.
You’re also riding a number of trends which I find exciting:
- Custom is the new frontier in luxury and “affordable luxury”. There is a huge pull away from mindless consumption towards more meaningful, one-off purchases.
- The maker movement is of course a deep trend, especially in an age where self actualization is possible and the economy is forcing a ton of people to invent their own future.
- Extremely disruptive platforms like real-time rendering from Lagoa or full-colour 3D printing are making it possible to share and iterate designs on the fly, making the process of collaborative creation and design possible.
This is our first investment out of fund IX and a rare foray away from our seed and first round focus; at $18M this is a whopper for us to lead, but every rule is made to be broken when you feel strongly about a team and the metrics follow.
I have tested the product and the conversion funnels numerous times since we first meet the team 3 years ago; it’s a complex workflow to crack. In fact the reason why I passed on previous rounds is because I questioned whether the team had the product and design chops to nail this problem. In recent quarters they have made giant strides on the product side and hired senior talent to help them nail it, and their traction shows the clients and makers are responding.
In any event, I am super excited to be backing Mike and Seth in building what I am confident will be a shining success for e-commerce, built in Boston. Now if you’ll excuse me, I need to order a custom granite stand for my new wind sculpture :-)