Venture Capital: Online Shopping Store Hollar May Down Shutters
VC investors may take a haircut on their investments in Hollar, an online dollar store.
VC investors such as Kleiner Perkins, Index Ventures, Pritzker Group Venture Capital, B Capital Group, Lightspeed Venture Partners, Greycroft, Comcast Ventures, Forerunner Ventures, and Troy Capital Partners had pumped in $75 million in the startup.
Meanwhile, a report in The Street said last month that Five Below (NASDAQ: FIVE) expanded its digital capabilities by acquiring an e-commerce platform, fulfillment operation and certain other assets from Hollar. The Street quoted Five Below CEO Joel Anderson as the source of the information. Five Below is a Philadelphia chain focused on $5-to-$10 products for tweens and teens.
Hollar’s business premise
Brian Lee, who previously led ShoeDazzle and The Honest Company, and former Honest Co. executive David Yeom founded Hollar in 2015.
L.A.-based online store Hollar offers bargains on branded consumables, ranging from kitchen goods to toys to beauty products. It sold “the coolest gifts and goods starting at just $1…with a gazillion categories to shop.”
Its main claim to profitability relies on multiple online purchases by dollar-store customers, thereby saving on shipping costs.
However, these economics failed to work out, according to AXIOS.
Brandless, the $3 store, shuts down
Earlier this week, Brandless, one of the very high-profile investments of SoftBank, announced its decision to shut shop while it still had the resources and time to pay severance to its employees, according to protocol.
Brandless, which raised $290 million from investors, has the dubious distinction of being SoftBank Vision Fund’s first failure.
Launched in 2017, Brandless originally offered all products at $3 each. However, it could never deliver on its business plan due to quality issues on its products and high shipping costs. It appears that it too faced problems similar to Hollar.
In the shutdown notice, the Brandless board said “the direct-to-consumer market is fiercely competitive” and that it “ultimately proved unsustainable for their business model.”
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