Selling a venture-capital firm on investing in the old-economy business of picture framing isn't easy. But that's exactly what Framebridge founder Susan Tynan did in June.
Her Washington, D.C.-based startup turns one year old this month and has already raised nearly $12 million in funding from groups like New Enterprise Associates and Revolution Ventures, the venture firm of AOL founder Steve Case.
What's so great about the company? Framebridge is on track to generate more than $3 million in annual revenue for 2015 by making custom framing easy and affordable.
Brick-and-mortar framing stores operating in the $5 billion U.S. framing market pay pricey Main Street rents, and they can charge hundreds of dollars for even their lowest-cost frames. Framebridge customers send digital files or hard copies of art and photos and pay between $39 and $159 per framed piece.
Here's how Tynan showed VCs the big picture.
1. Identify an inefficient model. Tynan's pitch to investors centered on the the advantage her operation would have over most frame stores, which purchase their materials only after customers place an order and rely on distributors to cut materials into pieces. The inefficiency of this model, which also requires paying retail staff even during downtime, makes custom framing a costly process, she says.
Framebridge sells frames at lower prices by offering a limited selection of frames it can purchase upfront in bulk. The company also eliminates middlemen by cutting its own frames. "For my VCs, there's something exciting about saying we know how to do something that people want--better," Tynan says.
2. Demonstrate long-term demand for your product. Prior to founding Framebridge, Tynan managed multiple business lines at local goods and services online marketplace LivingSocial, which was also backed by Revolution. While many products declined in popularity over time, demand for framing never subsided, she says.
Why? Consumers are constantly looking for ways to preserve artifacts and other items they cherish. "We are dealing with things that really matter to people, like handwritten wedding vows or the only photo somebody has of a great-grandparent," Tynan says.
3. Prove you can attract new customers to an old market. Tynan says the framing market would be much bigger if the process of framing weren't so expensive. How does she know?
One third of Framebridge's customers report that they had never framed something before using the service. "People who were turned off entirely to the category are now excited that we're in it," Tynan says.
While you might expect Framebridge to expand into several other related products, Tynan says her strategy is to defend her market position by investing only in the existing product line. "There are ways to get better and farther ahead than anyone who wants to come into our space," she says.