This morning Rebundle, a hair-focused startup based in St. Louis, announced that it has raised $1.4 million in a pre-seed round. M25, a venture firm with a geographic focus in the Midwest, chaired the fundraising event. Prior to its pre-seed round, Rebundle had hired a CEO and co-founder Ciara Imani May described in an interview with TechCrunch as a six-figure grant and other non-dilutive capital.
Rebundle creates and sells hair extensions made from plant-based materials. My knowledge of hair extensions is modest, but May walked me through a few important points. First is the market both big, and varied, with countless price points from cheap (plastic-based products) to expensive (human hair). And secondly, plastic extensions can irritate the scalp.
Before founding Rebundle, May focused on living more sustainably, she said, and is aware of the irritation plastic extensions can cause. What her startup has created has the potential to both remove plastics from product to make customers’ minds feel better, limit waste and help the environment.
To create its product, Rebundle uses banana fiber as the core material in extensions that it sells in a variety of colors. In particular, the company is building new manufacturing facilities in the United States instead of offshore facilities.
Manufacturing brings us back to the funding round, which the CEO says is being used to invest in both their team and their supply chain. Rebundle sold out in an hour or less before raising more capital, meaning previous funding sources were too small to scale properly. Enter venture capital.
Rebundle is a DTC company that sells its products through its website. I asked May how many times a year someone who uses hair extensions would swap them out for a new set. She said up to five times a year. This means Rebundle is selling what appears like a repeat purchase through its own channels. The gross margin profile of the extension market isn’t clear to us at this point, but the potential regularity of extension sales makes rebundle an interesting business case.
Remember, mountains of venture capital were invested in the DTC model for products that lacked a recurring catch, an experiment that had mixed results.
Regarding the apparent issue of subscriptions to its products, the co-founder was reluctant to share details, only admitting that there is “room to play” with the idea. Extension customers today, she explained, typically don’t buy subscriptions to the product. If Rebundle can scale its onshore manufacturing and add a recurring service to its product mix, I wouldn’t be shocked to see the company grow again this year.
It probably won’t be necessary. The company’s CEO told TechCrunch that their latest round was put together with a rolling close, but that the capital will offer at least 18 months of runway and maybe a little more. So there probably isn’t a near-term need for more funding at Rebundle, although the lack of cash certainly hasn’t stopped many startups from raising more capital when it’s offered.
