Venture capitalists have fallen in love with wedding startups.
The attraction is undeniable. The wedding industry is a huge and lucrative market that is ripe for disruption.
“We love to invest in areas where technology hasn’t really made a dent yet, but could make a dent if applied properly,” said Lister Delgado, a managing partner at IDEA Fund Partners.
Delgado led the firm’s $1.5 million investment in WedPics, a social platform that allows wedding parties to share photos before, during, and after their big day.
“The wedding industry is certainly one of those areas.”
There are about 1.5 million formal weddings a year nationwide. And the average cost of those weddings in now $29,858, according to TheKnot.com. Investors can do the math and see that weddings represent a roughly $45 billion market, and that doesn’t include money spent on gift registries and honeymoons.
Thus, it’s not surprising that VCs are courting wedding startups.
Still, some investors are hesitant to invest in the wedding space because most people only get married once in their life. Thus, if you’re in the wedding business, you’ll likely never see your customers again, unless they’re named Larry King (married eight times).
That was certainly one of David Shen’s concerns when he led Launch Capital’s investment in Little Borrowed Dress. After some research, he learned that it’s a different story when your target customer is the bridesmaid, and not the bride. Little Borrowed Dress, which runs a site that rents out bridesmaid dresses, secured $1.5 million from Index Ventures and Launch Capital.
“You don’t have to wait until someone gets a divorce to get a repeat customer,” he joked.
The thing he loves most about the company, though, is that it is solving a problem.
“They figured out how to make money on each dress they rent and how to deal with the operations of cleaning the dress and putting it back on the rack once it’s returned,” he said.
Tina Hoang-To, a former venture capitalist at Technology Crossover Partners, said “I do” to the wedding industry when she was planning her own nuptials in 2012. She quit her job and launched Wedding Spot after noticing an opportunity in the market.
Wedding Spot operates a site that helps couples search, price, and compare wedding venues, The company raised $250,000 in seed funding and is about to close a new $1.5 million venture round.
The first thing she did to prepare for her own wedding was to go on existing sites like WeddingWire and TheKnot. They had a ton of pretty pictures, but not the practical information she was looking for, namely, pricing data on venues.
“I needed to know if I could afford the Four Seasons,” Hoang-To said.
It was difficult playing phone tag with venues and sometimes waiting two weeks to receive a wedding packet. She said she felt something was wrong with this industry, as everything was happening offline and there was no transparency around pricing data. “That was frustrating,” she said.
Wedding Spot has collected data from thousands of wedding venues, including ballrooms, hotels, museums and mansions. Users can select the venue of their choice and get instant quotes. The site schedules appointments for brides to meet with the venue managers. She said the site is seeing a 35 percent to 40 percent conversion rate. Venues pay $100 per appointment, although they can book a $50,000 wedding from that one meeting.
“VCs like us because we are not just another advertising company,” Hoang-To said. “We are introducing efficiencies in the wedding marketplace and solving process problems.”
Wedding Spot plans to to roll out the service to major U.S. metropolitan areas by the end of the year.
If successful, expect many more VCs to walk down the aisle with wedding startups of their own.
Photo illustration courtesy of Shutterstock.