I prepared the following analysis of Keaton Row's Series A funding as part of my InSITE Fellow application. It was a great way to build my understanding of the fashion e-commerce market, and especially trends in discovery and curation. If you want to understand how Keaton Row fits into its competitive landscape, and some of its operational and strategic strengths, take a look. Enjoy!

1. KNOWLEDGE FOR ACTION
$6MM SERIES A TRANSACTION ANALYSIS
Ramya Varma, WG ‘17

2. KNOWLEDGE FOR ACTION
Company Strategy
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Consumer Pain Points
• New product discovery in the fashion space is challenging and overly complex (paradox of
choice)
• Traditional shopping experience (brick-and-mortar retail, single-store e-commerce) is stale and
reduces repeat purchasing motivation
• Mass-market consumer with substantial buying power—upper middle class professional—has
minimal time to find, choose, and style clothing appropriate for her image
Solution Details
• Two-sided marketplace structure (connects shoppers and stylists; contingent staffing with a
commission structure)
• Keaton Row stylist confers directly with customer; provides personal, customized styling advice
and “lookbooks” from which consumers can link to a third-party retailer to purchase
• Affiliate revenue model based on customer purchase volume
Keaton Row connects consumers seeking personal styling services and
product recommendations with commission-based stylists

3. KNOWLEDGE FOR ACTION
Market Trends
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Industry Trends
• $1.2 trillion apparel market size, expected to grow to $2 trillion by 2018
• E-commerce sales made up only 9% of overall spend in 2014, emphasizing room
for future growth
• Scale and scope of e-commerce product offerings continues to drive movement
toward curation and targeted discovery
Financing Trends
• $712 million of venture capital invested in beauty and fashion startups YTD 2015
• Niche “people services” platforms, aka 2nd generation marketplaces for services,
identified as an investing trend for 2015 by Andreessen Horowitz and KPCB

4. KNOWLEDGE FOR ACTION
Competitive Landscape
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Keaton Row
– Strengths: Addresses underserved high-end fashion consumers; personal relationship element drives more
tailored styling and repeat usage; lack of in-house inventory expands styling possibilities and minimizes risk
– Weaknesses: Service differentiation requires strong stylist relationships, i.e. KR must continue to recruit and
retain high-quality stylists as the company grows; potential for disintermediation on a customer-by-customer
basis
Stitch Fix
– Strengths: Strong adoption; rapid revenue growth; algorithm allows mass personalization
– Weaknesses: Algorithm-based styling leads to weak personalization; minimal human input (consumer- or
stylist-side) into styling decisions
Le Tote
– Strengths: Unique “Netflix for fashion” clothing rental subscription model; affordable price point
– Weaknesses: High churn rate; high-touch logistical model
Nordstrom’s Trunk Club
– Strengths: Existing base of personal stylists; successful men’s service offering and male audience
– Weaknesses: No current women’s offering (in development); traditional retailer inertia

5. KNOWLEDGE FOR ACTION
Financial Analysis
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$6mm Series A funding at $6mm pre-money valuation (50% equity ownership
assuming common stock)
• Investors: Time Inc., Menlo Ventures (follow-on), Rho Capital (follow-on) and Grape
Arbor Ventures (follow-on)
Comparable Company Valuations
• Industry standard valuations of 2-4x sales (source: Pando)
Exit Opportunities
• Time Inc. (investment based on e-commerce partnership opportunities)
• Nordstrom’s Trunk Club (women’s styling offering is currently pre-launch,
aggressive history of e-commerce acquisition)
Company Date $ Raised Valuation* Revenue* Rev. Mult.
Stitch Fix Jun-14 30.0 300.0 100.0 3.0x
Just Fab Jun-14 85.0 1,000.0 400.0 2.5x
Trunk Club Jul-14 Acquired 350.0 50.0 7.0x
($ in mms) *Reported

6. KNOWLEDGE FOR ACTION
Recommendation
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Strategic Considerations
• Differentiates through greater personalization and human interaction; “eye for style”
is difficult to achieve purely via algorithm
• Marketplace model (connecting clients with stylists working on commission) creates
scalability and incentivizes quality of service
• Low inventory and supply chain risk due to third-party fulfillment
Financial Considerations
• High valuation vs. comparables ($6mm pre-money on ~$1mm revenue)
• Slow revenue growth: business model refinements or lack of traction?
• Positive signaling by seed investor follow-on in Series A transaction
• Time Inc. partnership creates visibility into potential exit
– “Keaton Row’s peer-to-peer social commerce model matches our sensibility and will open up
an array of e-commerce opportunities.” EVP, Time Inc.
Conclusion: Invest at $6mm pre-money on strength of exit opportunities and unique
fulfillment model

7. KNOWLEDGE FOR ACTION
Sources
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• Business Insider
• Pando
• Crunchbase
• CB Insights
• Business of Fashion
• Strategy Eye Digital
• Businesswire
• Mary Meeker’s Internet Trends