1st Dibs Raises $42 Million

Online decorative and fine art marketplace 1st Dibs has raised $42 million, this after $60 million last year for a large stake by Benchmark, a high tech venture capital firm.

Fellow appraiser Joette Pierce sent me an article from the Wall Street Journal which reviews the deal, and also notes the large investment against the revenue generated by 1st Dibs.  According to the article, investors are looking for 1st Dibs to become the eBay for wealthy collectors.

The article also lists some interesting statistics on antique and collectible sales on line, represent only 8% of dealer sales, and up only from 5% of sales five years ago.

The Wall Street Journal reports

Part of the new funding comes from Benchmark, an early supporter of eBay Inc., which last year paid $60 million for a big stake in 1stdibs.

People familiar with the matter say about $50 million of Benchmark's initial investment went to cash out the company's founders, including 49-year-old Michael Bruno, who—according to its website—resolved three decades ago to get enormously rich by the time he was 50. Now, 1stdibs is raising more money to expand its business.

The latest round of funding is unusually large, given that the company brings in just $10 million to $15 million a year in revenue, according to people familiar with the matter, and that less than 10% of the deals initiated on the site are completed online. The vast majority of deals, 1stdibs says, close over the phone or in person.

But the venture firms are betting the site can be an eBay for the wealthy, a group whose spending has rebounded quickly coming out of the recession. They say they plan to bring in more dealers and customers and expand overseas. 1stdibs says it intends to relaunch its website soon, making it easier to search, browse and buy online. After that, it will experiment with new ways to collect commissions on online sales.

Clinton Howell, owner of Clinton Howell Antiques in New York, has been listing items on 1stdibs for the past two to three years. Last year, Mr. Howell sold five items on 1stdibs, each valued at $10,000 to $20,000. This year, he hasn't sold as much. "It is spotty for me," he says.

Mr. Howell, who spends about $7,000 a year to list his wares on the site, says it needs to find a way to differentiate the good merchandise it carries from its superior offerings and to limit itself to high-quality dealers..

David Rosenblatt, the site's chief executive, says 1stdibs is working on ways to distinguish items by quality. He says it also has a waiting list of dealers, which all get vetted, and believes maintaining the trust and quality of the site is paramount.

The antiques business has been slow to take to the Web, partly because dealers find it hard to represent the quality of antiques online. Online sales account for just a fraction of the art and collectibles market—8%, according to Forrester Research, up from 5% five years ago. That compares with more than 50% of sales of items such as computers, software and music.

Accel Partners, an early backer of Facebook Inc., got close to a deal with 1stdibs last year, but backed out due to concerns about the high price and uncertainty over how much the business could be expected to grow, people familiar with the matter say.

Still, there are signs the market is picking up. As the wealthy have become more comfortable buying big-ticket items online, dealers in rare items are less reluctant to offer them there, says Steve P. Murphy, CEO of the auction house Christie's.

Christie's, a unit of Christies International PLC, has been accepting online bids for its live auctions since 2007. In November 2011, Christie's held its first online-only auction selling items from Elizabeth Taylor's estate. The auction brought in nearly $10 million—nine times what the auction house expected—and it has conducted several online-only sales since then. On Thursday Christie's announced a new house record for an online sale: an Edward Hopper painting that fetched $9.6 million.

"The best thing to happen to auctions since the telephone is the Internet," says Mr. Murphy, who added that 72% of the 6,000 people who have registered to bid online at Christie's are new to the auction house.

Source:  Wall Street Journal (sometimes the link will be blocked by the WSJ paywall, if so go to Google News and search for 1st Dibs and the full article should come up)