123 Baby Box, an Irvine baby product subscription box company, recently raised an oversubscribed $1.2 million pre-seed round.
“It’s really hard to get funding right now,” especially as a retail company, because “investors currently like to fund AI and tech,” founder and CEO Zarina Bahadur told the Business Journal.
Startups led by women also tend to get a smaller share of VC funding than companies started by men, the 24-year-old founder added.
U.S. companies with all-women founders last year received 1.9% of all VC funds, or around $4.6 billion, according to the PitchBook-NVCA Venture Monitor. That’s down from 2.4% in the year prior.
“All the cards are kind of against us, in terms of fundraising,” Bahadur said. “But we were able to successfully raise capital with great investors.”
Investors in 123 Baby Box’s most recent funding round include former Barnes & Noble CEO Demos Parneros, former Steve Madden President of E-Commerce Mark Friedman and GoDaddy Senior Director of Engineering Naren Parihar.
VC firm and business accelerator XRC Ventures, angel investment group Salt Lake City Angels and student-run VC firm Crescent Fund also participated in the round.
123 Baby Box has raised over $1.3 million to date. The company plans to launch a roughly $10 million fundraising round over the next 18 to 20 months, Bahadur said.
College Entrepreneur
Bahadur’s inspiration for 123 Baby Box came about three years ago, after she saw an exhausted mother in a store shopping for baby products while holding a crying newborn in one hand and a toddler in the other.
“I thought, why couldn’t all these things come to her conveniently packed in a box?” Bahadur said.
She started her company as a student at University of California, Irvine, attending classes in the day and shipping and packing boxes from her parents’ garage at night, she said.
A year after completing her undergrad, Bahadur earned her master’s from UCI’s Paul Merage School of Business in 2020.
She entered her company into multiple pitch competitions, placing first in several, including the “2 Minute Drill” Amazon Prime TV show, where last year she won $50,000 in cash and prizes.
Bahadur’s participation in pitch events has also connected her with her most notable investors.
“I pitched at Demo Day in New York and sitting in the audience was the former CEO of Barnes & Noble,” she said.
Growth Goals
Bahadur will use the funding to purchase products at scale and move her company’s operations to a warehouse.
“We’ve been constrained with not being able to purchase a lot of inventory and not having space, because we’re still in my garage,” she said.
She also hopes the latest funding round will help the company develop its four different revenue streams.
Its first and second revenue streams come from the boxes and the individual products featured in them, while the third stream will stem from a product placement fee and the fourth will be from corporate clients looking to incorporate the company’s products into their maternity leave offerings.
With its current model, 123 Baby Box has quadrupled its revenue since 2021. The company continues to grow at a roughly 14% monthly growth rate.
“It’s pretty great given that consumer spending is down because inflation is high,” Bahadur said. “It’s hard to sell a product in today’s market.”
