LONDON — LoveCrafts, the UK-headquartered marketplace for craft products, announced on Tuesday that it has raised £26 million in new funding from Scottish Equity Partners, as well as previous investors Balderton Capital and Highland Europe.
LoveCrafts isn’t a traditional e-commerce site — it favours building communities around different kinds of crafts rather than just serving as an online shopfront.
Right now LoveCrafts runs two online communities: Knitting and crochet. Users can follow each other and purchase designs for knitting and crochet projects.
LoveCrafts takes a cut of the cost of designs, as well as any of the crafting supplies sold through the site. It’s essentially a mix between a social network and a more traditional, Etsy-style marketplace.
LoveCrafts said in a press release announcing its funding that it will use the money to launch more online craft communities and expand internationally.
Business Insider interviewed two of LoveCrafts’ founders, Edward Griffith and Nigel Whiteoak, at the company’s London office before the funding round was announced.
LoveCrafts is considering adding lots of news crafts
Whiteoak said that the company is considering expanding to several new crafts, including sewing, quilting, papercraft, baking and cake decorating. Griffith added that he’s also keen to see technology projects on the site such as Raspberry Pi computers.
Investors don’t always understand LoveCrafts
LoveCrafts isn’t a typical technology startup — its customers tend to be female and middle-aged, rather than the standard tech audience of young men. So that has lead to some investors being confused about the company. There’s “generally a kind of puzzlement” from investors, Griffith said. “It’s very rare to find an investor who has hands-on knowledge of the crafts world.”
However, sometimes investors do have personal experience of the world of crafts. “It does happen. Occasionally you’ll find an investor will talk about their mother,” Griffith added.
LoveCrafts doesn’t find that its users are less digitally savvy than the rest of the population, Whiteoak said. “This population is pretty active online. We’re not in the late nineties anymore,” he said. “They have all got their iPads, or their tablets or their phones. They’re all pretty savvy online. It’s far easier for them to shop online than it is to go down to the shops. [It’s] far easier for them to find a pattern than to have to wander down to their newsagents and pay their money.”
Griffith said the inspiration for LoveCrafts came from watching his partner struggle to source crafts online. “I was watching my better half struggling to get designs and struggling to get the ingredients,” he said. “[I] wanted to provide a better, more integrated solution.”
“She was looking at magazines for designs and was struggling to find the stuff that she needed or she was looking on Pinterest and then couldn’t find what she needed, it was never described anywhere. She was looking at blogs. The whole thing seemed to need a more integrated digital solution.”
The US is now LoveCrafts’ key market
LoveCrafts is based in London, but its main market is now the US. Griffith said that the UK is now the company’s second market, and it accounts for around 30% of orders. LoveCrafts has shipped items to around 140 companies, but its founders say the site wants to launch localised versions to help it expand more.
LoveCrafts has an office in Ukraine
It’s common for technology companies to split their teams up to take advantage of cheaper labour costs in other countries. Fintech startup TransferWise has a team in Estonia, for example. Griffith said LoveCrafts has a development office in Kiev, Ukraine.
“We wanted to be able to double the size of the product development team in the next year,” Griffith said. “It’s quite hard to grow quickly. We’ve gone from one engineer to product development is now 60 or something in the space of three years. London is still the heart of Europe’s tech scene. It’s still really competitive.”
LoveCrafts took an unusual approach to choosing Kiev as the city for its second office. Griffith said the company used data from coding platform GitHub to map where in the world people with certain technical skills were. That lead the company to Kiev. The second reason, Griffith said, “is that I have friends there.” Those friends have helped introduce the company to local lawyers and accountants, Griffith said.
There are often problems with splitting the company between different offices, though. “It’s hard to find great videoconferencing kit,” Griffith said. “[It] will be the first thing on my shopping list after our Series C funding. We haven’t solved that one.”
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