This morning Grouping, a St. Louis-based hair-focused startup, announced it raised $1.4 million in a pre-seed round. M25, a venture capital firm with a geographic focus on the Midwest, led the funding event. Prior to its pre-seed round, Rebundle had raised what the CEO and co-founder Ciara Iman May described as a six-figure grant and other non-dilutive capital in an interview with TechCrunch.
Rebundle creates and sells plant-based hair extensions. My knowledge of hair extensions is modest, but May explained a few key points to me. First, the market is the two big ones, and varied, with a myriad of price points ranging from cheap (plastic-based products) to expensive (human hair). And second, plastic extensions can irritate the scalp.
May focused on more sustainable living before founding Rebundle, she said, and was aware of the irritation plastic extensions can cause. What his startup has created has the potential to both eliminate plastics from the product, help customers feel better, and limit waste, helping the environment.
To create its product, Rebundle uses banana fiber as the base material in the extensions it sells in a variety of colors. In particular, the company is building new production facilities in the United States rather than overseas.
Manufacturing takes us back to the funding cycle, which the CEO says will be used to invest in both her team and her supply chain. Rebundle was selling out of stock within an hour or less before raising more capital, which meant previous funding sources were too small for it to scale properly. Enter venture capital.
Rebundle is a DTC company, selling its products through its website. I asked May how many times a year someone using hair extensions could change them out for a new set. She said up to five times a year. This means that Rebundle sells what appears to be a recurring purchase physical good through its own channels. The gross margin profile of the extension market is unclear to us at this point, but the potential consistency of extension sales makes the Rebundle an attractive business case.
Recall that mountains of venture capital have been invested in the DTC model for products without recurring catchphrases, an experiment that has had mixed results.
On the obvious issue of subscriptions to his products, the co-founder objected to sharing specifics, only allowing there to be “room to play around” with the idea. Today, extension customers, she explained, typically don’t buy a subscription to the product. If Rebundle can expand its onshore manufacturing and introduce recurring service to its product line, I wouldn’t be shocked to see the business grow again this year.
He probably won’t need it. The company’s CEO told TechCrunch that his last lap was compiled with a rolling fence, but the capital will provide at least 18 months of track, and maybe a little more. So there’s probably no short-term need for more funds at Rebundle, although not needing the money certainly hasn’t stopped many startups from taking on more capital when they are. proposed.