Birchbox Eeks Out $15M Round

Birchbox has managed to raise some new funding in the form of a convertible note – meaning as of now Birchbox has a loan that could later morph into an equity stake. Birchbox has also now has access to a several-million dollar credit line, according to recent reports.

Birchbox has been suffering from a dwindling bank account in the first half of 2016 – the firm has laid off 80 employees this year, rethought and table expansion plans and discontinued its efforts in Canada entirely. The firm has also recently been on a mainstream retail hiring spree, a move that was originally made to support a brick-and-mortar expansion and an eventual IPO.

That IPO has become almost infinitely eventual at this point – and the focus these days are to align with the VC world’s new favorite metric: profitability. Birchbox has successfully captured the attention of investors and other entrepreneurs. The firm has raised $71.9 million in VC funding and spawned any number of similarly premised subscription box services. But actually making that service profitable has thus far proved elusive.

VC investment fell significantly in Q4 2015, dropping 30 percent to $27.2 billion, according to venture capital research firm CB Insights, meaning Birchbox hasn’t been the only firm feeling the funding pinch this year, though it has felt it particularly dramatically and publicly.

The overall issue is that subscriptions are a novel gimmick like flash sales before them, but like flash sales they have a built-in expiration date when their novelty wears off and too many imitators start cutting into consumer spend. Birchbox’s current investors are willing to see if the firm can manage a turnaround, and is apparently given them the holiday season in 2016 to do it during.

CEO Katia Beauchamp told Recode that the latest round of cash could be the thing the firm finally needs to get well-established on the path to being profitable.

“September is our six-year anniversary and then it’s the holidays and that’s a really big time of year for us,” she said. “That’s where the focus is.”