Airbnb Inc. in travel, Uber Technologies Inc. in transportation, Zillow Group Inc. in real estate: Most industries have been changed dramatically by tech startups in recent years. Zola Inc. just tied the knot on a big financing round to try to do the same for the costly and complex business of weddings.
The startup, led by former Gilt Groupe executive Shan-Lyn Ma, said Thursday it raised $100 million from investors including Comcast Corp. and Goldman Sachs Group Inc. The deal values Zola at about $600 million, according to a person familiar with the deal.
Founded in 2013, Zola runs an online wedding registry that lets couples see what guests have bought them before the gifts are delivered, letting them swap out unwanted items and avoid the hassle and cost of returns. Last year, Zola added guest-list and website-building tools. Ma said she wants to build more products to become the dominant company in what Zola estimates is a $100 billion market.
“Today a couple has to use probably 20 different products or apps or services,” Ma said. “Some of these products aren't even designed for wedding planning and some of them were designed a decade ago. It shouldn't be that way.”
The roughly $600 million valuation would make Zola worth around the same as XO Group Inc., a publicly traded company founded in the late 1990s that runs wedding-planning websites and a marketplace for wedding services. Much of the rest of the industry is fragmented.
The round, led by Comcast’s venture capital unit, brings Zola’s total funding to about $140 million. Lightspeed and Thrive Capital also participated.
“Unlike most e-commerce businesses, I would say it features a handful of really attractive attributes,” said Ian Friedman, who led Goldman Sachs’ investment in the deal.
Zola can predict how much of a certain product it needs to order well in advance, because people fill out registries weeks, if not months, ahead of a wedding. The company avoids most returns, or what Friedman calls “the silent killer of retail,” by letting couples switch out things they don’t want. And Zola doesn’t carry inventory risk by stocking up items in its own warehouses.
That all makes the company an “e-commerce business that exhibits the predictability of a software business,” Friedman said.
Ma started Zola in 2013 after leaving Gilt, the flash-sale e-commerce company that was eventually sold well below its peak private-market valuation.
Zola’s new $100 million is more than Ma initially set out to raise, but it doesn’t change the company’s plan, she said. “One of the things we want to mitigate against is often when startups raise a large round they get tempted to spend money on things they would not have spent on previously,” she said.
The company has around 110 employees now, and plans to grow to round 150 by the end of 2018. Marketing will ramp up though, and Zola plans to spend more on TV advertising to get its name in front of millions of Americans, Ma said.