Zulily Adds $85 Million, Sees Sales on a $500M Annual Pace

11/15/12Follow @curtwoodward

It sounds pretty simple: Package big sales of sought-after goods for moms and kids and start selling each day at 6 am.

But that little bit of e-commerce wizardry might be a lot bigger than it sounds—and it’s turned Zulily into one of the fastest-growing startups in the Seattle region, with monthly revenue now on a pace equivalent to nearly $500 million in annual sales.

Today, Zulily is announcing that it’s raised an $85 million Series D round of financing led by Andreessen Horowitz, the marquee San Francisco Bay Area venture capital firm that has invested in companies including Facebook, Twitter, Foursquare, Pinterest, and Skype.

(In the Seattle area, Andreessen Horowitz also has backed Apptio, a fast-growing provider of software that tracks businesses’ IT costs.)

Zulily, founded in2009, raised $43 million back in August 2011, with reports (led by GeekWire’s John Cook) saying the company was valued by investors at $750 million. Today, just before news of the newest financing broke, Dan Primack of Fortune reported based on anonymous sources that Zulily would now be valued at $1 billion by its venture backers.

So what’s that all mean? Aside from the flurry of figures, this slug of money shows that major VCs see a big upside in Zulily’s business.

The company has been on a pretty fast growth pace. Zulily says it now has more than 10 million members who have signed up for its daily sale e-mails—double what Zulily previously claimed. It’s also got some 600 employees spread between its Seattle headquarters, a regional office in London, and shipping or buying offices in Reno, NV and Columbus, OH.

Asked about the company’s sales, CEO Darrell Cavens pointed to figures provided to the Wall Street Journal: A monthly sales rate that equates to nearly $500 million in annual revenue.

Another illustration of the company’s growth: Last year, Zulily was moving merchandise so fast that its shipping contractors couldn’t keep up, disappointing its customers. As we reported this spring, that prompted Zulily to bring all of its shipping under its own banner, building a distribution arm for the company in just about eight weeks.

The latest fundraising also raises the possibility that Zulily could become a new namebrand retail company based in Seattle, adding to a strong legacy in a region that boasts huge names like Nordstrom, Starbucks, and REI. Zulily’s founders, Mark Vadon and Darrell Cavens, are veterans of Blue Nile, the Seattle-based online jewelry seller.

In an interview, Cavens says the financing doesn’t mean you should expect to see Zulily racing to the public stock markets anytime soon.

“We just have a vision that Zulily is a brand that can scale broadly, and we’re going to use this money to continue investing and building that business,” he says. “We’re still so young.”

Curt Woodward is a senior editor for Xconomy based in Boston. Email: cwoodward@xconomy.com Follow @curtwoodward

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