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  • Etsy – Union Square Venture: Making craft fashionable again

    Posted by MarionJullien on September 2, 2019 at 9:19 am

    What is quite remarkable about Etsy, an American company founded in 2005, is how it managed to find traction among a very passionate and idealistic group of people and how the company pivoted from its initial idea.

    Founded by Rob Kalin, Chris Maguire, Jared Tarbell, and Haim Schoppick, Etsy started as a freelance website building company. After building a crafter forum for an early client, the founders began reading through what users were saying and noticed an overwhelming consensus on the lack of ways to sell crafts. They immediately changed strategy, changed their name, and became one of the most successful crafts-selling websites.

    One of the founders, Kalin, attended 5 different colleges before finally graduating and turning to woodworking. Realizing that he had no convenient place to sell his products (eBay was taking high fees), he decided to launch his own platform to sell crafts!

    Esty has been backed since the beginning by Union Square Venture (USV), which invested in four financing rounds (seed, series A, B and C). USV made $500M in 2015 from its initial investment in 2006. Blogging on the USV website, Fred Wilson, the founder of the fund, wrote: “We have not found anything in the online commerce area that has interested us until earlier this year when we met Rob Kalin and his co-founders.” Betting on the team and on the product, the VC firm was right, as shown by the tremendous returns they made.

    Because most of these investment rounds happened a long time ago, Etsy was yet not required to break down the rounds in detail to the SEC, so it is virtually impossible to compute an exact rate of return, however, Wilson, got his shares at 8 cents per share during the 2006 Series A investment round, selling them now at more than 30$ per share. This roughly adds up to a 375X return on his investment (angel investors bought them at 5 cents per share though…).

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