Cash in a Flash for Russian Fashion Site

KupiVIP concentrates on flash sales of luxury goods in Russia. But with a big funding round, the company could grow its offerings.

Image: KupiVIP

A group of Western venture capital firms has heaped money onto a Russian flash-sales site that plans to use that cash to become more like a Russian version of Amazon.com.

Founded by 28-year-old German entrepreneur Oskar Hartmann in October 2008, KupiVIP has grown at a rate of speed that venture capitalists love. Since its early days, the Moscow-based company has quadrupled its users to 7 million Russians and grown sales 600 percent in 2010.

KupiVIP's business model resembles those of Western sites such as Gilt Groupe: The company gets its hands on designer goods from labels such as Dolce & Gabbana and sells them to members at huge discounts, but for a limited time only.

The model has proved hugely popular worldwide, drawing investment to firms from the U.S. to China, and now, Russia. To that point, KupiVIP has landed $55 million in funding from a group which includes London’s Balderton Capital in its first Russian investment. Other investors include Bessemer Venture Partners, which has offices in California, New York, and Cambridge, Massachusetts; and two big global VC players, including Accel Partners, with U.S. offices in New York and Silicon Valley, and Mangrove Capital Partners, which is based in Luxembourg.

The size of the round makes this the largest-ever venture investment in a Russian e-commerce firm, KupiVIP claims in a press release.

Jeremy Levine, of Bessemer said, “At Bessemer, we have been scouring the globe for e-commerce opportunities for several years now. With our investment in KupiVIP, we…have a stake in the fastest-growing online retailer in one of the fastest-growing e-commerce markets in the world,”

But KupiVIP plans to use this round of funding to go beyond the model and to tap into the second-largest e-commerce market in Europe after Germany.

“Our new partners recognize that KupiVIP has only begun to scratch the surface of what we can offer global brands as they race to connect with the Russian consumer. More than 200,000 customers log on to our sales every day, and we deliver millions of packages to members every year,” Hartmann said. “Now we have everything we need to exploit the opportunities offered by this vast and still-growing market and to develop KupiVIP into a world-class e-commerce powerhouse.”

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