Durham e-commerce startup Spoonflower bought by Shutterfly for $225 million
Durham e-commerce startup Spoonflower, which sells custom fabric and runs a marketplace for designers, has been bought by Shutterfly in a deal worth $225 million.
The sale comes after Spoonflower saw record growth during the pandemic, as consumers chose to shop online instead of in-person and more people turned to crafting while stuck at home.
Spoonflower lets artists upload their own designs to its platform, making it easier for them to create custom products.
The 12-year-old company saw its sales grow by 162% in 2020, The News & Observer reported, leading to the opening of a new manufacturing facility in Durham and a plan to grow its team to 450 employees from 350.
California-based Shutterfly, founded in 1999, is a website that lets users store photographs and offers a variety of printing services and products. The company says it has 21 million active users, which was a big reason Spoonflower agreed to the deal, said Michael Jones, Spoonflower’s CEO.
Jones, who will continue leading the company after the sale, said Spoonflower had been interested in raising additional money from investors to keep pace with demand for its products, when it began conversations with Shutterfly a few months ago.
The company’s experience in manufacturing and delivering products worldwide — as well as a desire to maintain Spoonflower’s brand — convinced Jones it was the right deal for his company.
“We could have taken outside investment to grow,” he said in a telephone interview. “But they are established experts in manufacturing and fulfillment across the world, and we can take advantage of that.”
For its part, Shutterfly said it made the purchase so it could tap into the growing home decor market — especially as Spoonflower has seen recent growth in fabrics for wallpaper, linens and bedding.
The sale will need to go through regulatory approvals before it is finalized. But the companies anticipate the closing date for the sale to be in the third quarter of this year.
“Driven by its passionate creative community and a visionary management team, Spoonflower has ... experienced explosive growth over the last 18 months amid the thriving DIY consumer movement,” Shutterfly CEO Hilary Schneider said in a statement. “It’s a highly complementary strategic fit for Shutterfly and a win/win for consumers, employees, and members of our creative community alike.”
Spoonflower currently has manufacturing operations in Durham and Berlin, Germany. Jones said Spoonflower still has plenty of room to expand its operations in Durham, but noted Shutterfly’s existing operations, especially on the West Coast, could cut down on delivery times for customers.
In the short-term, Spoonflower customers shouldn’t notice any changes, Jones said. Given time, he added, customers should expect better service with the scale Shutterfly provides. It might also benefit artists who post their designs on Spoonflower, as a growth in customers on the site could lead to more sales of custom designs. Artists currently get a 10% commission on the sale of any fabric or wallpaper that uses their design.
Jones noted Shutterfly will likely grow its own headcount in the Triangle as well — something the company hinted at in its own announcement. “It will be good to have another big player in town creating reasons for people to stay,” he said. “It didn’t go unnoticed on them that Google and Apple are investing here.”
In a statement, Schneider lauded the Triangle’s growing tech talent base.
“The Research Triangle Park area ... is also home to a talented workforce and an entrepreneurial culture,” she said. “We are excited to have a growth hub in RTP for further expansion across Shutterfly.”
The sale will also be a win for local investors.
Spoonflower had raised $25 million from investors prior to the sale, according to venture capital tracker Crunchbase. One of its main investors was Durham-based investment firm Bull City Venture Partners.
David Jones, a co-founder of Bull City Venture Partners, said Spoonflower is an example of how the local startup ecosystem can work well — with local money helping a promising startup grow. Bull City first invested in Spoonflower in 2015 and advised it on the hiring of key executives.
“We thought this could be a big company, so it is awesome to see it grow into what it’s become,” Jones said in a telephone interview.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate.
This story was originally published June 14, 2021 at 5:07 PM.