Beauty Lies in Eye of the Investor

Hoping to secure a leadership position in the increasingly competitive category of online beauty supplies, Eve.com of San Francisco last month raised $17.5 million in its third round of venture capital financing.

The Series C round was led by first-time investor Weiss, Peck & Greer Venture Partners. Existing investors Menlo Ventures and Charter Venture Capital each made commitments that exceeded their pro rata rights. In February, the pair combined to invest $3 million in Eve.com’s Series B round. The company was formed as an idealab! incubator project last November.

Launched June 10, the Eve.com Web site distributes brand-name beauty supplies and provides users with aesthetic advise from in-house beauty professionals. Calvin Klein, Elizabeth Arden and Benefit are among the product lines distributed by Eve.com.

“We are positioned in the marketplace as the site that offers the brands in beauty at the right price,” said co-founder Varsha Rao. “We are unique to who else is out there and who else intends to come online.”

Later this year, Gloss.com, which is backed by Bessemer Ventures, and Ingredients.com, which was developed by a pair of Ivillage executives and recently received $4.5 million from Scripps Ventures, will launch online beauty sites. Gloss.com has an exclusive Internet distribution deal with a soon to be released Michael Jordan fragrance. Ingredients.com will seek to differentiate by offering its own product line.

“This is an industry where consumers are very brand focused,” Rao said. “We will spend millions on marketing to help make our products easily available to our customers.”

The company has used the proceeds from the offering to hire separate agencies for online and offline advertising campaigns. As part of the deal, Weiss Peck Partner Christopher Shaepe has joined eve.com’s board of directors.

Rao said it is likely Eve.com will raise additional private capital before the end the year, although she would not specify whether it would come from venture or strategic investors.