Kit Maker Aims for Target Boost

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Kit Maker Aims for Target Boost
Putting It Together: Staff at the Melrose Avenue store of MakersKit

Shop after shop along Abbot Kinney Boulevard said no to selling the do-it-yourself project kits made by Jawn McQuade and Mike Stone, co-founders of MakersKit near West Hollywood.

But a $20,000 order from Macy’s changed the company’s fortunes, leading to distribution with other large retailers and, in February, the opening of its first store. Now MakersKit has been picked to join Target Corp.’s first retail accelerator, part of a growing trend for large corporations to mentor and invest in startups.

Stone, the company’s chief executive, said he expects that participation in Target’s three-month Minneapolis program, co-run by Techstars, will help the company get play with mass retailers.

“Our goal overall is to become a household name and brand,” Stone said. “Being the most distributed DIY (brand) in specialty retail has definitely helped us get there, but I think to fully become credible it should be in mass retail where you’re exposed to it every day.”

Target’s accelerator differs from traditional predecessors such as Amplify.LA of Venice and Mountain View’s Y Combinator in that companies have the choice of whether or not to accept funding in exchange for equity.

Each business has the option to accept up to $120,000 from Target and Techstars. In exchange, companies give up 6 percent to 10 percent equity, depending on how much money they receive. They can also opt to receive no funding, according to Target.

“We’re looking at the first year of our accelerator as a chance to learn and mentor these companies,” said Jenna Reck, Target’s manager of public relations. “We have the option to invest later, but primarily want to learn from this experience.”

Ryan Broshar, managing director of Techstars Retail, said the main difference between its traditional accelerators and those it forms in partnership with companies comes down to advice.

“It’s a similar structure, but the mentor pool and interaction they’re having is much more aligned with where they are as a company and where they want to go,” he said.

Boxed up

This is the second time MakersKit has participated in an accelerator but its first foray into the growing field of corporate accelerator programs.

Corporate accelerators are a relatively recent phenomenon, one that has been embraced by businesses as diverse as Walt Disney Co., the Los Angeles Dodgers, and Cedars-Sinai Medical Center.

Omkar Kulkarni, director of the Healthcare Innovation Accelerator at Cedars-Sinai, said the program sifted through more than 500 applications before narrowing the field to 11 startups, which graduated from its inaugural program last week.

Corporate accelerators, he said, are valuable due to their narrow focus within a specific industry.

“Compared to a traditional accelerator, the real value they get is a closed partnership with a provider system like Cedars-Sinai,” Kulkarni said. “If you ask a health care startup or entrepreneur, it’s very difficult to get a meeting with a health care organization or hospital – let alone direct mentorship opportunities and commercialization.”

Kulkarni said accelerators also give corporations an opportunity to stay abreast of the latest innovations, adding that most of the participants in the medical center’s first class have been able to land commercial arrangements with Cedars or clinical trials that will begin once they leave.

Embracing process

MakersKit offers custom kits for shoppers wanting to get their hands dirty with homemade projects such as building hanging plant terrariums and crafting cocktail bitters from scratch. The company sells more than 100 types of kits that average $28 each. More than 300,000 units have been sold, said Stone, who declined to state MakersKit’s revenue but said the business is profitable.

He said he was initially hesitant to apply but was ultimately enticed by the opportunity to receive advice from Target’s top brass, including Chief Executive Brian Cornell and Casey Carl, chief strategy and innovation officer.

“Honestly, we thought we were a little too far along to do another accelerator,” he said. “But as we thought about it more, it was an awesome opportunity.”

Stone and McQuade co-founded MakersKit in 2014. Stone previously owned San Francisco clothing chain Indie Industries, where McQuade served as general manager of the company’s five shops.

The two began hosting weekend DIY workshops for fun, teaching customers how to screen print T-shirts and make their own candles, among other things. The workshops attracted the interest of Google and Yelp, which asked MakersKit to host workshops at company events.

Stone and McQuade did that for five months before realizing they could create an e-commerce business by packaging their tutorials into at-home kits accompanied by how-to videos on YouTube.

The company moved its headquarters to Los Angeles two years ago and raised $1.5 million in seed funding the same year. The round was led by Tribeca Venture Partners with support from Bertelsmann Digital Media Investments, Mesa Ventures, Greycroft Partners, and Vayner/RSE. MakersKit operates out of a 6,000-square-foot space downtown.

In addition to its distribution with retailers such as Nordstrom and Williams-Sonoma, the company collaborates with other businesses to offer customized kits. For example, it has partnered with National Geographic to launch a monthly subscription box that will be themed around different countries.

Narrow target

Stone credits the company’s quick growth to its participation in Techstars’ New York accelerator two years ago.

He said the program helped the firm achieve scalability and growth alongside a class of diverse startups that included a children’s e-book company and a human resources software developer.

“It was amazing to be in that environment,” he said. “But with this Target program, it’s very retail focused and everyone is a little more like-minded.”

Target and Techstars received more than 500 applications, according to Target’s Reck. The final 10, which also include L.A. mobile app Branch Messenger, will work out of Target’s headquarters until September.

Participating in an industry-specific accelerator hosted by a potential corporate partner has its benefits, said Cole Harper, chief executive of L.A. crowd analytics firm DoorStat.

Harper’s company finished a three-month stint last year with the Dodgers Accelerator, conducted with New York accelerator R/GA Ventures, and has been able to have discussions with numerous sports organizations as well as companies such as Anschutz Entertainment Group, Westfield Corp., and Disney.

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