Cubcoats Founders Capture $5M Seed Investment, Quickly Turning Viral Kidswear Product into New Consumer Category
LOS ANGELES, Nov. 1, 2018 /PRNewswire/ -- In under one-year, Californian entrepreneurs Zac Park and Spencer Markel launched a sensational 2-in-1 children's product that took the internet by storm, secured licensing agreements in the process, and have now raised $4.85 million in seed round investments quickly becoming a household name in a nearly $180 billion market.
Already the company has attracted highly selective strategic investors including Major League Baseball, Jen Rubio (Co-Founder, Away), Daniel & Michael Broukhim (FabFitFun, Co-Founders), Hilary Duff, Patrick Schwarzenegger, Dreamers Fund founded by Will Smith & Japanese Soccer Star Keisuke Honda and The Harmon Brothers (the agency behind the famous Purple Mattress, Chatbooks, Squatty Potty, and Poo-Pourri videos). A series of Harmon Brothers videos for Cubcoats will launch this Fall.
"The first time I saw the transformation from plushie to hoodie, I was excited," Hilary Duff commented. "I knew my son would be super into it, kids love to be able to do things on their own! Every kid needs a great hoodie and this one has so many purposes!"
The market Cubcoats is targeting is the burgeoning childrenswear space, where parents are estimated to have spent more than $173 billion in the U.S. in 2017, according to a study by Global Industry Analysts Inc., and where stealthy direct-to-consumer e-commerce players are steadily wrestling dominance away from their brick-and-mortar predecessors.
In November 2017, Park and Markel erupted onto the scene with Cubcoats, a stuffed animal that seamlessly and conveniently transforms from a toy into a wearable hoodie for kids. With the help of 50 million plus social media views, national media coverage and some high-profile celebrity backing, Cubcoats went from a hastily sewn-together concept to a high-quality, durable product that top retailers were excited to add to their shelves.
In their first year, Cubcoats averages more than 25,000 daily site visitors and expects to record sales between $5 million and $10 million in 2018 and based on current trajectory expect upwards to 500% revenue growth in their second year.
However, the longtime friends and first-time business partners have no intention of stopping at hoodies and plush animals, the latter of which was by itself a roughly $1.3 billion market in the U.S. in 2017.
"In the beginning, we knew we were more than a consumer product company, but we weren't positive about what we had exactly," said Markel, a former big law-firm M&A attorney. "Through the vision and creativity of Art Director Mimi Chao, we quickly discovered we created a mesmerizing universe with vivid characters that came to life through a consumer product and have promising intellectual property potential."
Cubcoats won't be leaving brick-and-mortar retail out of the equation, either. After being tapped by retailer Nordstrom Inc. to feature Cubcoats products in more than 100 stores nationwide through the holiday season, the company's co-founders anticipate an increase in wholesale retail sales in the near future.
The origin story of Cubcoats began with Park, a viral marketer who has consulted on a dozen kickstarter campaigns, including some in the hoodie and garment space.
"We thought to ourselves, what can we create that would bring over a novel and sticky concept that could sell well to parents and create a lasting brand relationship with kids," the 29-year-old Park said. "We wanted a product that a child would get attached too, grow up with, and want to gift to their future kids."
Park linked up with his longtime friend Markel, whose experience dealing with complex transactions and negotiations as an M&A attorney would prove vital to the pair's early success.
The duo then worked to raise funds among themselves, family and friends and built a lean team to develop Park's and Markel's early concepts of the Cubcoat into a marketable product, securing a coveted utility patent in the process.
Between the Cubcoats, the company sells today and their first iteration, which was little more than a stuffed animal sewn to the hood of a hooded sweatshirt, were over 100 prototypes that explored various nuances of tying the toy to the garment, including the critical element of sitting the stuffed animal in the hood horizontally rather than vertically.
Today, Cubcoats has fully evolved into a product that is attractive to investors, evidenced by its successful seed funding round. The company uses only ethically sourced materials, and Cubcoats' mission of helping kids goes even further by participating with Baby2Baby, Children Mending Hearts, and Make March Matters.
Cubcoats also has succeeded without a big-time marketing budget. Through its viral social media marketing campaign and unsolicited coverage in national and internet publications, Cubcoats has managed to avoid burdening itself with unsustainable marketing expenses by creating viral content that has led to a positive return on digital ad spend.
The success of this method speaks to the quality of Park and Markel's first product and its ability to wow children and adults alike.
ABOUT CUBCOATS
At Cubcoats, we believe that ordinary items should be exciting and playful. That's why we created a 2-in-1 wearable and playable friend: a soft hooded sweatshirt that transforms into a stuffed animal. Perfect for families on-the-go, Cubcoats are both fun and functional, making playtime exciting and allowing parents to travel light.
Cubcoats are patented, soft plush toys that unzip into high quality, warm hoodies designed to keep kids snuggly and entertained on every adventure. All of our products are carefully crafted from ethically sourced, premium machine washable materials, and available in sizes for children 2-8 years old.
Cubcoats are available on www.cubcoats.com.
SOURCE Cubcoats
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