The internet is a big place, and there are millions of recommendations for products tailored to babies. So how do you find the right products? And why would you trust a 20-something person with no children to help you?
Well, Zarina Bahadur got her inspiration, actually, from a mother in the grocery store when she was a student at The University of California Irvine studying business.
“I was in Target and saw a mom in her work clothes and she had a crying baby in one hand, a toddler in the other, and her cart was filled to the brim with baby products,” Bahadur told TechCrunch. “I thought to myself, we’re living in the 21st century: Why can’t all these things come to her and be packed in a box. That’s kind of where the idea stemmed from.”
She began doing some research and found that new parents faced something Bahadur called “analysis paralysis.” She explained that there is “overload of baby products,” including some that aren’t needed, but that it is difficult to cut through noise to find the basic products that will help the baby as it ages and reaches development stages.
Bahadur started 123 Baby Box, a monthly subscription box for babies, in March 2021 to curate products for parents based on a quiz about their child’s age and development. Subscriptions are $59.99 per month or $49.99 per month for six months and $39.99 per month for an annual subscription.
Along with other preferences they provide, members are sent a box with products from among six categories: health and wellness; development; playtime; useful items, like clothes and beds; “Mama’s goodies,” like a lipstick, face mask or bath balm; and special spotlights, which might be baby technology.
For manufacturers, the company is able to provide them with customer insights regarding their products, including demographics into where their products are popular. 123 Baby Box is also working with them to launch new products through its boxes as well as advertising opportunities.
Baby products is a huge market — $29 billion in the U.S. alone — so as you can imagine, 123 Baby Box is not the only company creating subscription boxes for parents. Bahadur said the company’s closest competitor is baby subscription box company Lovevery, which has raised $126 million in venture-backed funding since it was founded in 2015.
Explaining the differences between 123 Baby Box and Lovevery, Bahadur explained that Lovevery sends wooden toys on a two-month interval, while her company’s boxes are tailored to the baby’s age and developmental stage.
“Our niche is evergreen,” Bahadur added. “Our convenient subscription service not only brings the hottest and most unique products, but also the useful ones and must-haves as well.”
Bahadur learned early-on just how needed 123 Baby Box was to parents. Not only did she win first place in one of UC Irvine’s startup competitions, she got an acquisition offer eight months after starting the company. She turned it down.
Last year was also filled with a lot of activity: the company grew 245%, tripled its revenue and saw its monthly recurring revenue increase five times over 2021. The company got into the XRC Labs accelerator program and also signed a deal with a large U.S. breast pump distributor to send 123 Baby Box to 1 million of its customers.
123 Baby Box added five employees for a total of nine and now works with well-known baby and child brands, including Fisher-Price, Mattel, Nuby and Goddess Garden.
Though Bahadur had been bootstrapping the company since its launch, after securing the distribution deal, she knew she needed more funds to deliver those boxes, which she was packing out of her parents’ garage.
She decided to go after venture capital, raising $1.2 million in pre-seed funding from an investor group, XRC Labs, Sunstone Fund, Salt Lake City Angels, VC California Crescent fund and angel investors like former Steve Madden executive Mark Friedman and Demos Parneros, former CEO of Barnes and Noble.
The funds will be used to get out of her parents’ garage and into a warehouse, marketing, hiring and inventory. The round will also help 123 Baby Box reach its Series A metrics of $100,000 monthly recurring revenue and hitting the $1 million annual recurring revenue mark, which Bahadur expects to take approximately two years, given the challenging economy.
Up next, the company will build out its four revenue streams: the box itself, an e-commerce store to sell individual products and a loyalty program, product placement fees for manufacturers and suppliers and business-to-business sales so that 123 Baby Box can be part of employee benefits packages. Bahadur said the company already secured its first corporate client in January.
“With this capital we have a 12-month runway, but we’re really trying to extend it out actually to a 20-month runway just to make the money go a little bit further and so we can become sustainable and profitable,” Bahadur said. “We actually will be profitable by the time we raise our next round, which I’m happy about.”