Hedge fund Viking Global Investors has paid $15m for a majority stake in Birchbox, the US-based cosmetics delivery service backed by mass media group Comcast, Recode reported on Tuesday.
The company had raised $87m in equity and convertible debt financing from investors including Comcast’s corporate venturing subsidiary, Comcast Ventures, but sources told Recode the deal will wipe out its existing investors, which will exit with nothing.
Birchbox operates a service where subscribers receive boxes of beauty product samples which they can if they wish choose to buy more regularly. It has some 2.5 million active users across six countries, it said.
However, the company has rung up tens of millions of dollars of debt, according to sources. The Viking Global investment will cover working capital, and comes after Birchbox’s existing backers provided it with $15m in convertible note financing in 2016.
Comcast Ventures invested in Birchbox as part of a $60m series B round in 2014 led by Viking Global Investors that valued it at $485m.
The series B round also featured Accel, which had led Birchbox’s series A round, as well as First Round Capital, Aspect Partners, Glynn Capital, Consigliere Brand Capital, Slow Ventures, Red Swan Ventures, TriplePoint Venture Growth BDC Corp and private investor Sam Lessin.
Big-box retailer Walmart had entered talks in August 2017 to acquire Birchbox, and multiple sources told Recode home shopping company QVC had been in negotiations to buy the company in what would have been a ‘fire sale’ before Viking Global’s investment.
– Image courtesy of Birchbox.