Facebook may have the generalist, mass-market social network on lock down, but when it comes to communities based around special interests, the playing field remains full of promise. Today, a UK startup called LoveCrafts, aimed at knitters and other home craft makers with a platform that is part social-network and part e-commerce marketplace, is announcing a significant growth round of £26 million ($33 million) to seize that opportunity — expanding into new categories and doubling down on international growth, according to an interview with CEO and cofounder Edward Griffith.
The Series C, led by new investor Scottish Equity Partners, is the largest VC investment in a UK startup so far this year (the UK market, as you can see, is a little more conservative than the US).
Others participating in this round include previous investors Balderton and Highland Europe. The valuation is not being disclosed, both Griffith and LoveCraft’s investors told me, except to note that it is “north of £100 million.” Total raised by the company to date is £43 million ($55 million in today’s currency) on revenues of “tens of millions.”
Knitting and home crafting may not sound like particularly lucrative categories for e-commerce when you compare them to the world of already-completed garments, whether that’s fashion retail based around designer labels or big brands or more bespoke items a la Etsy or Modcloth.
However, this is misguided: knitting and crochet alone, without considering sewing or other home crafts, is a multibillion dollar business, just when considering the revenues of the three biggest brick and mortar stores serving this market in the US: Joann, Hobby Lobby and Michaels.
“You don’t understand how big it is until you start adding it all up,” Griffith said.
This was also what persuaded its investors. “What was interesting to us in the beginning was the secret of how large the crafting market is,” Stuart Paterson, a partner at SEP, told me. “It’s not one that people think of as large and sizeable but there is about $100 billion of annual spend.”
There are other sites on the web that aim at knitters and other crafters — they include Pinterest, Craftsy, Ravelry and PlanetPurl. What LoveCrafts has created is a unique blend of free social network; plus free or low-cost patterns; plus competitive prices to buy the equipment needed to make them — a combination that is not achieved in quite the same way anywhere else. (Pinterest aggregates lots of links, but not an efficient way to buy supplies (yet?); Craftsy is largely aimed at education; and so on.)
Griffith will not talk in specifics but says that there are currently “millions” who visit LoveCrafts to download patterns (there that over 100,000 on the site now), and this makes for a “nice conversion” of between three and five percent on purchases related to those patterns.
LoveCrafts makes money today only on the sale of yarns and other knitting and crocheting supplies. Any revenue collected on patterns goes straight to the creator of that pattern.
And the company wants to stick to its knitting, so to speak: it has no plans to change this model in the future to include membership fees or other monetization channels, Griffith said.
Going ahead, he added that the plan will be to expand to other kinds of haberdashery such as quilting and other sewing, and possibly into other areas like jewellery making and possibly baking — basically, categories where LoveCrafts can apply its model of creating a community for people to talk about their crafts, show off their finished work, trade patterns and buy supplies to make the objects.
The US accounts for about 45 percent of LoveCraft’s market today, and we’re likely to see the company build up its presence even more there in the near future. Griffith lived and worked in Brooklyn before coming back to London and starting LoveCrafts with university friends Cherry Freeman and Nigel Whiteoak, and given the proximity of Etsy and other maker communities there, it’s a likely spot for a bigger US operation.