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Mattress Startup Casper Joins the Unicorn Club With Latest Funding

Selina Wang
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Mattress Startup Casper Joins the Unicorn Club With Latest Funding

(Bloomberg) -- Online mattress retailer Casper Sleep Inc. is the latest startup to join the unicorn club. The company plans to announce Wednesday it has raised a fresh $100 million in funding at a $1.1 billion valuation. Casper said the cash infusion will fuel its international expansion and the growth of its physical retail stores.

Investors in the round include Target Corp., New Enterprise Associates and Norwest Venture Partners, as well as new backers including Dani Reiss, the chief executive officer of Canada Goose Holdings Inc. and Gordon Segal, co-founder and former chairman of Crate & Barrel. The new funding brings Casper’s total money raised to $340 million.

Founded five years ago, the company started by selling mattresses directly to consumers online. It has since expanded into pillows, bedding and sleep accessories, with the goal of becoming the world’s first "end-to-end sleep company." Casper said it surpassed $400 million in revenue last year. The startup has also added new independent board directors including Reiss and Karen Katz, Under Armour Inc. board member and former CEO of Neiman Marcus Group Inc., which she sits on the board of as well.

The company operates in the U.S., Canada, U.K., Germany, Switzerland and Austria. CEO Philip Krim said that its next big international market will be Asia. With the addition of new investors and board members, Krim said the company has the expertise to enter those markets. Canada Goose recently expanded into China, and Under Armour has a significant Asia business. In China, Krim said "the Casper brand will resonate really well around trends like wellness and urbanization."

Casper is part of a growing class of startups in areas from mattresses to eyeglasses that are selling directly to consumers -- mostly online, as well as in a growing number of physical stores. Casper is investing in a slew of brick-and-mortar stores across the country to drive sales. It currently has 23 retail locations, and plans to multiply that number this year.

Despite the capital-intensive nature of physical locations, Krim said the stores increase brand awareness, reduce customer acquisition costs and drive more online sales.

"Normally you open a store, have to build presence, then the store loses money and eventually pays back after many years," Krim said. "We have such a productive digital business that we’re profitable on day one of opening a store."

The online mattress industry has grown more competitive with retailers like Purple Innovation Inc. and Tuft & Needle. Casper and its online rivals have damaged traditional players like Mattress Firm Inc., which plans to close hundreds of stores.

Casper declined to comment on reports that the company is seeking to hire IPO underwriters.

"In my mind there’s only one path forward for us, and that’s to build a very large standalone generational brand," Krim said.

To contact the reporter on this story: Selina Wang in San Francisco at swang533@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Anne VanderMey, Andrew Pollack

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