Monthly Handbag Service Among 5 Startups in Latest Gener8tor Class
The list of products that businesses are now shipping to customers on a periodic basis as part of a subscription service seems to be getting longer all the time. Consumers can sign up to receive a monthly supply of makeup, wine and cheese pairings, and even cat litter, just to name a few examples.
Add Ivory Clasp, a handbag subscription startup formed last year, to the list. And now, the Los Angeles-based company will attempt to grow its business with the help of Gener8tor, the Wisconsin-based startup accelerator that selected Ivory Clasp and four other startups for its latest program. (More on the others in a minute.)
Users who sign up for Ivory Clasp start by taking a style quiz, and then pay $45 to have a new bag shipped to them each month, says co-founder Avi Zolty. (There’s also an option to receive a bag every other month, with users paying the same per-item rate.)
Zolty, a serial entrepreneur who co-founded Ivory Clasp with Sean Rimokh, says that the bags the company ships to subscribers would typically cost $100 to $200 at a store like Macy’s (NYSE: M).
Zolty says that Ivory Clasp deals directly with businesses that sell handbags. However, under the terms of the agreements the startup has made, Ivory Clasp is not able to say which brands of handbags users might receive. That’s because some companies do not want the fact that they’re selling items at a discount to be broadcast widely because it could affect how outsiders perceive their brand, he says.
“If you’re a [handbag seller], you know that the retail stores are going to buy a certain percentage of your inventory,” Zolty says. “If you want to sell any more than that, you’re going to have to decrease your price,” which is not always appealing to the bag maker, he says.
Zolty says that subscribers should understand they’re not likely to receive a bag from a top-end brand such as Louis Vuitton. (According to a TechCrunch report, one of the companies that has sold bags through Ivory Clasp is California-based Splendid.)
Ivory Clasp has about 15 full-time employees and more than 2,900 users, Zolty says.
Seeking to connect with investors who might support Ivory Clasp’s efforts to grow further, the startup decided to participate in Gener8tor, which runs training programs for early-stage companies and invests in them. Ivory Clasp found Gener8tor appealing because of its footprint and network in the Midwest, Zolty says. (Gener8tor also has an office in Minnesota, and has run programs there.) Having a presence in the middle of the country can be advantageous for companies that ship products from coast to coast, he says.
Since launching in 2012, Gener8tor has graduated nine classes of early-stage companies from its core accelerator program. It recently unveiled its latest group of companies, which has been working from Madison, WI, since the program kicked off in February. It will culminate on May 11 with a pitch event at the Barrymore Theatre in Madison.
Gener8tor and its backers provide participating companies with $20,000 in cash at the start of the program, in exchange for an equity stake of 6 to 7 percent. Participants are guaranteed a follow-on investment of at least $70,000 in the form of an uncapped convertible note.
In recent years, Gener8tor has held its core 12-week program twice a year—once in Madison, and once in Milwaukee. Its portfolio comprises 49 companies, and that total does not include the startups in the current class. Last fall, Gener8tor said they had together raised more than $100 million from investors. Gener8tor also runs two shorter, no-strings-attached startup accelerators, which it calls gALPHA and gBETA.
Here are descriptions from Gener8tor of the other four companies in its current class:
—Errund (Madison, WI): Software that helps customers find cleaning and other professional services for their homes and offices.
—Fertilify (Toronto, Canada): Fertility supplements for women, as well as men. The company says its products are aimed at women who want to maintain their fertility later in life, women who are pregnant or recently gave birth, and couples trying to conceive a child or undergoing in-vitro fertilization.
—Veramarx (Dedham, MA): A diagnostic test for early-stage Lyme disease that is still currently in development. According to the company, Lyme disease can be treated more effectively when diagnosed shortly after a patient is infected, and tests that are currently on the market are not always reliable.
—Vyrill (San Francisco): Machine learning-powered software that marketers can use to get insights on users and brands. The startup says its data visualization and reporting capabilities allow users to identify popular videos and content creators.