After growing 130 percent last year and 500 percent since 2018, Washington, D.C.-based floral delivery startup UrbanStems said on Wednesday (May 5) that it’s on track to book its busiest week in its four-year history thanks to a surge of Mother’s Day orders, and also that it has just closed a $20 million round of funding.
In announcing its Series C fundraise, which brings UrbanStems’ cumulative outside investment to $48 million, CEO Seth Goldman told PYMNTS he plans to use the proceeds to invest in people, more products and additional technology. “We are thrilled to be able to raise this capital and put it to use in building our team, making significant investments in our technology platform and building out our infrastructure,” he said.
As of now, the direct-to-consumer (D2C) merchant does about 75 percent of its sales on flowers and the remainder on gifts, such as candles, vases and assorted teas and chocolates, which it is looking to expand. The company currently ships its goods to all 48 states and offers same-day delivery service in Manhattan, Brooklyn and Washington D.C., but is also eyeing new markets.
“We are currently evaluating about 10 markets where we might expand our same-day service, and will soon begin to prioritize them,” Goldman said, noting that UrbanStems evaluates markets based on revenue potential, supply chain complexity and the strategic value of being in a particular market.
Different and Disruptive
Like any of the growing array of delivery-dependent retail businesses, UrbanStems must contend with the “final-mile” challenges inherent in bringing goods to customers’ doorsteps on time and undamaged.
However, unlike the majority of retailers that outsource delivery to third-party services or use contracted or non-benefited gig workers to carry their goods, UrbanStems has taken a different in-house approach that it deploys across the firm — from growers to designers to delivery staff. “From the beginning, we have employed all of our last-mile couriers as W2 employees, with benefits,” Goldman said, noting the time and effort required to attract and retain talent in all areas of the business.
At the same time, the company has cultivated its own source of flower growers, which has not only allowed it to cut out the middlemen, but has also given it more control over what is planted and picked. “We wanted to establish direct relationships with growers, which allows us to purchase the absolute best stems, but also have the most control over the supply chain,” he explained. “Over the past four years, we have focused on making our designs increasingly more beautiful, unique and interesting, and having these direct relationships has been critical to this effort.”
Growing the Business
Since its launch on Valentine’s Day in 2014, UrbanStems said it has sought to “disrupt an outdated floral delivery system” by providing a superior experience to its customers. Today, the company employs more than 100 people, and its growth is catching the eye of customers and investors alike.
“Based on our experience with direct-to-consumer brands, we see a tremendous amount of opportunity in the personalized gifting space. We strongly believe, based on their focus on product quality and customer experience, that UrbanStems is primed to accelerate their rapid growth,” said investor Jason Stiles, CEO of DFE Capital Management. “We are extremely excited to partner with the UrbanStems team.”
In the meantime, while the company eyes new same-day cities, it has also launched a new TV marketing campaign and entered into branded partnerships with Vogue and online dating site Bumble.
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