BeachMint Raises $23.5M at a Rumored $150M Valuation

Up until now, ecommerce valuations have been relatively reasonable compared to social media valuations. As Aileen Lee of Kleiner Perkins and Kevin Ryan of Gilt Group discussed on stage at Disrupt, there’s resistance for these companies’ prices to get too out of control because frequently the margins are tight and scaling up takes time and investment.

Also, ecommerce companies have a pretty clear business model. That sounds like it should be a good thing for whetting investor attention, but the unfortunate truth is nothing ruins a wildly speculative valuation like real revenue numbers. Real revenue numbers usually get multiples off existing revenues, not multiples off the promise of what they could be.

Someone should tell all that to BeachMint, because its new funding round seems to break all of those preconceived notions. The company has confirmed exclusively to TechCrunch that it has raised $23.5 million, just six months after its last $10 million venture round. The company wouldn’t comment on the valuation, but according to our sources it was at a rich $150 million pre-money valuation.

This brings BeachMint’s total invested to date to $38.5 million. This round was lead by Scale Venture Partners with Chicago-based LightBank coming in as a new investor as well. Also participating in this round were all the existing investors including Valley firms Trinity Ventures and NEA. Scale general partner Sharon Wienbar had been tracking the company for a while and was impressed by the combo of a strong curation model, an experienced team mixed together with “a little of that Southern California celebrity magic.”

BeachMint, started by MySpace cofounder Josh Berman and Diego Berdakin, primarily operates a site called JewelMint, which is almost the exact same model as ShoeDazzle. People join a monthly club, fill out a fun survey to asses their personal style, and they’re shown a selection of jewelry each month they might like for about $30 each.

Unlike the old CD clubs of my childhood, there’s no obligation to buy something every month. Like ShoeDazzle is cofounded by Kim Kardashian, JewelMint has some celebrity backing too, from Kate Bosworth and her stylist Cher Coulter. (In case it’s not clear, they did not design the jewelry used to illustrate this post.) Its second site, StyleMint is opening in June and will feature T-shirts designed by the Mary Kate and Ashley Olsen for $29.99 per month. The plan is to expand to multiple verticals, not just in women’s apparel. Things like food, wine, beauty products are all on the table. “We have 100 ‘Mints’ we’ve thought of,” Berman says.

The company seems to be doing well roughly nine months after the launch of JewelMint, but the rich valuation caught several Valley VCs by surprise. ShoeDazzle also recently raised a round of venture money at impressive terms: Andreessen Horowitz invested $40 million at a valuation we originally reported to be north of $200 million. We’ve since learned the post-money price was $280 million. Also not bad.

But a source with knowledge of both companies tell us there is one big difference between the two companies: Their revenues. ShoeDazzle is doing roughly $5 million in monthly revenues, while JewelMint is doing just $500,000 a month– literally ten times less. What made Andreessen Horowitz so hot and bothered to get in ShoeDazzle was the model in part, but it was also the revenues, the growth, and the company’s rabidly engaged Facebook fan page, which has more than 1 million users. JewelMint’s fan page attendance is about half that; then again it’s a younger brand. It also didn’t hurt that ShoeDazzle founder Brian Lee’s other company LegalZoom just raised a round from Kleiner Perkins and is expected to go public this year.

Either Shoedazzle’s investors got a steal, Berman is an ace negotiator, or investors really believe the vertical strategy is going to catch hold in a big way. BeachMint wouldn’t comment on revenues or the valuation, but said they had multiple bids at that price. “We talked to very quantitatively driven investment firms, and they got very excited when they saw the numbers,” Berman says.

A couple VCs we spoke with say they passed on the BeachMint deal because of concerns over whether this model works broadly across all a myriad of verticals. After all, sprawling shoe collections have made Imelda Marcos and Carrie Bradshaw aspirational figures for many women– it’s hard to think of many cult figures with obscene collections of $30 earrings. And other verticals may make less sense. How many categories are there where you want to pay $40 to have a new item every month? How many sunglasses, hair accessories, bath products or handbags does one woman need? When it comes to clothes, H&M and Zara are formidable low-cost, real-world incumbents.

Indeed, ShoeDazzle and JewelMint’s success is theoretically at odds with the philosophy behind another hot ecommerce company, Rent the Runway, which tries to solve the problem of a having a closet-full-of-nothing-to-wear by allowing women to rent a couture piece for the price they’d spend on something new at H&M.

Weinbar and BeachMint’s founders agree that jewelry is a far less intuitive category, and say the fact that JewelMint is going so well is evidence that there are others out there that might surprise us all. The risk is overload, particularly now that two companies have scored rounds at such impressive valuations. No doubt even more copy cats are on the way. Getting into the too-siloed “It’s a Facebook for people who like fish!” territory rarely ends well.