Durham’s Spoonflower raises $25M for expansion

Spoonflower, a fast-growing producer of on-demand fabrics, has raised $25 million in funding that it plans to use to develop new products and expand internationally.

“The investment is to take us in new directions,” said Stephen Fraser, co-founder of the Durham company. “We are hoping to ... accelerate the pace of experimentation with new products and new ideas.”

Spoonflower’s first round of institutional funding – it previously raised about $1 million from angel investors – was led by Boston-based North Bridge Growth Equity. A Durham venture capital firm, Bull City Venture Partners, also participated in the funding.

Spoonflower is the second Triangle company to land a large round of venture capital funding this month. Last week agricultural biotechnology company AgBiome, based in Research Triangle Park, announced that it had raised $34.5 million from investors.

Founded in 2008, Spoonflower has 150 employees – all of them in Durham – after adding 46 employees so far this year.

“I expect that in the next 12 months we will add at least 50 people here in Durham,” Fraser said.

In 2014 Spoonflower generated $15.3 million in revenue. Its revenue jumped 433 percent over the past three years, which put it at No. 1,009 on Inc. magazine’s latest list of the nation’s fastest-growing privately held businesses.

Spoonflower touts itself as the No. 1 producer of on-demand fabric; it also uses digital printing to create wallpaper and gift wrap on demand. Customers who go to the company’s website can either order fabric based on their own designs, which they digitally upload, or can choose designs produced by independent artists who work with Spoonflower.

“Spoonflower and its success is tied to the DIY movement – people who are sewing stuff and making stuff,” Fraser said. “There is always a market for tools that allow people greater freedom of personal expression.”

About 30 percent of Spoonflower’s sales go to customers overseas. The company aims to expand foreign sales by adding non-English-language websites and by opening an office in Berlin. Fraser anticipates that the company eventually will add production capabilities in Germany, but the timetable for such a move hasn’t been set.

One new product that Spoonflower is currently beta testing is Sprout Patterns, which would enable people to order fabric and a sewing pattern as an integrated package – with the pattern printed right on the fabric.

One challenge facing Spoonflower, said Fraser, is that the company’s on-demand fabric costs at least twice as much as mass-produced fabric. The company expects to whittle away at that gap over time.

“The technology we are using is really in its infancy,” Fraser said. “It is only going to get better.”

Spoonflower was co-founded by Gart Davis, who previously was president of Raleigh self-publishing company Lulu.com, and Fraser, a former marketing director at Lulu.

Fraser was introduced to Holly Maloney, a principal at North Bridge, at the Tech Venture Conference sponsored last fall by CED, a Triangle support group for entrepreneurs. That meeting was the beginning of a relationship that blossomed into North Bridge leading the company’s funding.

“It’s a good illustration, actually, of the usefulness of having an organization like CED in the community,” said Fraser, who also is on CED’s board of directors.

This story was originally published August 26, 2015 at 1:14 PM with the headline "Durham’s Spoonflower raises $25M for expansion."