Zaarly Rings Up $14M to Fuel Growth, adds Firepower to Board with HP’s Meg Whitman

Peer-to-peer e-commerce startup Zaarly, born out of a Startup Weekend event just this spring, has tallied a new $14.1 million venture round and is adding freshly installed Hewlett-Packard chief Meg Whitman to its board.

The news represents some pretty high-profile votes of confidence in Zaarly, which has only been around as a functioning product for about six months. The startup plans to use the money to add to its staff of 30 and expand its footprint in more markets, co-founder and marketing chief Eric Koester says.

Zaarly allows users to name their price for goods or services that they want, and let other people fill the orders. For instance, last night, somebody near me was willing to pay $15 for a copy of Mario Golf for the Nintendo 64. Cash sales are free, and Zaarly takes a processing fee on credit-card transactions. Competitors include TaskRabbit.

Zaarly's Eric Koester

“We certainly know that we have a long way to go on building the product out and continuing to make it more and more robust,” Koester says. “We’ve tied to build something that is ubiquitous across platforms. You can use the product on the Web, you can use it on iPhone, Android, through Facebook, you can use it through the mobile Web. Building a product that has that cross-functionality—it’s more complicated than I ever thought.”

The company is based in San Francisco, but its leadership team is pretty spread out around the country. Koester, who is well known in Seattle from his years as a startup lawyer, currently lives in Washington, D.C., while co-founder and CEO Bo Fishback lives in Kansas City, MO. Top staffers based in Seattle include product director Shane Mac and mobile director Peter Boctor.

Zaarly’s new round was led by Kleiner Perkins Caufield & Byers and Sands Capital Ventures, with John Suliman of Sands and Chi-Hua Chien of Kleiner Perkins also joining the company’s board. Koester says Whitman will be an independent director. Whitman’s role with Zaarly started when she was still working with Kleiner Perkins as a strategic advisor, but she’s since left the venture firm for H-P. Zaarly had previously raised $1 million, with investors including Ashton Kutcher, Lightbank Ventures, and Michael Arrington.

Zaarly doesn’t have a monstrous amount of users yet—only about 60,000 as of this story in ZDNet Sept. 20. Koester declined to elaborate on the user number, but says it’s grown since then. The number to watch, he says, is the value of transactions posted on the site, which has now topped $6.75 million and should cross $7 million by week’s end.

Also upcoming in the near future for Zaarly is building an application programming interface, which would allow other developers to build the Zaarly mechanism into their own products or services. Koester sees that step enabling applications that could benefit service providers, like a notary public who might want to use the crowd-ordering dynamic to field small jobs.

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5 responses to “Zaarly Rings Up $14M to Fuel Growth, adds Firepower to Board with HP’s Meg Whitman”

  1. julien says:

    14.1 million usd ???
    Is that a joke ?

    In bootstrapping mode i already built something just as awesome as Zaarly. Doesn’t make sense.

    In any case you wanna invest in my product, let me know ! Because with 14 million i rock the world

  2. They probably own 99.9% of the company and Koester agrees to work free for a thousand years for $14 million. It just shows you that there’s a lot of VC money out there and most VC’s, as much as they like to deny it, are gambling like the rest of us.

    If you don’t agree, just take a look at the track record for most of these startups.