Complex Made Simple

Well-designed shaving: Startups raise investors’ dollars

A little over a year and a half ago, Harry’s was just a men’s shaving start-up hoping to take a bite out of an industry dominated by Gillette and Schick with cheaper, sleeker razors.

Now the company owns a nearly century-old razor factory in Germany and has collected yet another big round of financing.

Harry’s announced on Tuesday that it had raised $75.6 million, its third big round in 18 months. The new money, led by Wellington Management, values the company at roughly $675m before the new financing is taken into account, according to a person briefed on the matter who spoke on condition of anonymity.

With the new cash, Harry’s will continue to pursue its goal of becoming the men’s shaving equivalent of Warby Parker, the popular purveyor of cheaper but well-designed eyeglasses and sunglasses that has captured the attention of the GQ crowd.

Another start-up, the Dollar Shave Company, has grabbed attention – and investor dollars – by pitching itself as a rock-bottom-price alternative to Gillette, along with a subscription model that venture capitalists like. Harry’s products, which now encompass shave creams and gels, are a little more expensive, but the company promotes their quality and thoughtful design as well as ease of reordering blades online.

Gillette has responded with its own subscription service.

Harry’s was introduced to Wellington, a veteran investor in consumer brands, a few months ago without any particular agenda, according to Jeff Raider, one of the start-up’s founders (and a founder of Warby Parker). But as those conversations continued, it became clear that bringing on the money management firm as a new investor made sense.

“It became clear that we were very much aligned,” Mr. Raider said in a telephone interview. “And yet we weren’t looking to actively raise capital.”

Much of the money will go toward building out the company’s factory in Eisfeld, Germany, which it bought in early 2014 with the help of a $100m venture capital round. Mr. Raider said the company had already broken ground for a new plant across the street and planned to expand its work force beyond its current 535 employees in New York and Germany.

Mr. Raider declined to provide specifics on the start-up’s financial performance, though he acknowledged that the company was not yet profitable as it continued to spend money on bolstering its growth.

He added that, though Harry’s has drawn plenty of attention for its products, he and the company’s other founder, Andy Katz-Mayfield, are not yet thinking about next steps like an initial public offering of stock or a sale.

“The company is still pretty young and still coming together,” he said. “We’re not really focused on future capital-raising events, but just focused on building a great company that does a great job for customers.”

© The New York Times 2015