Jet, the flashy e-commerce startup trying to take on Amazon, just raised $350 million in fresh funding at a $1 billion valuation, Re/code’s Jason Del Rey reports.
The company has now raised a whopping $570 million since its founding last year, and CEO Marc Lore tells Del Rey that it already has “verbal agreements” for another $150 million, coming soon.
The fresh round of financing comes despite ongoing questions about the company’s business prospects and an industry-wide debate about the lofty valuations being awarded to the new crop of tech startups.
And the company abruptly changed its business model last month.
When Jet launched, it audaciously took on Amazon by offering prices 10% to 15% lower than anywhere else, thanks to a membership fee and a proprietary “Smart Cart” savings algorithm. But in October, it dropped the $50 fee that it once proposed would be its sole source of profit. Now, Jet will be free for anyone to use, but it will only discount items by between 4% and 5%.
Lore told Del Rey that this latest fundraise comes despite “a challenging financing environment” but that it’s sky-high valuation is “just a testament to our performance to date and the size of the overall opportunity and the team we assembled.”
Earlier today Khosla Ventures partner Keith Rabois described the private market for early-stage startup funding similarly, saying it was “virtually impossible” to raise money right now without “extraordinary metrics.”
Jet boasted about just how impressive its own metrics are in a company press release about the funding news, announcing total sales of $33.2 million in October with a projected annualized GMV run-rate of $500 million by the end of 2015. Right now there are over 100 private companies valued at $1 billion or more, and with this fundraise, Jet joined the ranks of these so-called “unicorns.”
In addition to the $500 million new money raised, Jet’s press release also said that it will convert $130 million in convertible financing from February into Series B equity, bringing the total expected Series B equity round to $630 million.
“The last four months have been incredible and we’re thrilled with the response we’ve seen from both our members and retail partners,” Lore says in the release.
Disclosure: Jeff Bezos is an investor in Business Insider through hispersonal investment company Bezos Expeditions.
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