Casper has raised $170m in a new funding round led by Target, underscoring the rapid pace of change in consumer taste that has garnered the attention of retailers.
The group, part of a new wave of mattress companies that focus on the online market rather than traditional retail outlets, raised the funds at a valuation of about $750m, excluding the new capital raised, a spokesperson told the Financial Times.
The news, which was first reported by the New York Times, comes just days after Walmart, the world’s biggest retailer, disclosed a deal to scoop up digital-focused men’s apparel retailer Bonobos for $310m in cash.
Casper’s model differs from traditional rivals since its product is primarily sold through its website, as opposed to mattress stores where consumers test out models from various different brands. It only offers one type of mattress, made of memory foam, that sells for $550 for a twin size, up to $1,150 for a California king.
Its mattresses ship in compacted form in a box, and customers are given 100 nights to test-out the product. Casper, founded in 2014, has aggressively advertised both online and offline; for instance, in subways in New York. The product also on Sunday became available to purchase at Target stores, according to the retailer’s website.
Casper’s Series C round also included Tresalia, IVP, Norwest, Lerer Hippeau Ventures, NEA, and Irving Capital. Several celebrities invested, including Kevin Spacey, Curtis “50 Cent”Jackson and Carmelo Anthony. The group has raised $240m in total funding.
The online market for mattresses is highly competitive, with groups like Leesa and Tuft & Needle also competing for consumer dollars.
Target’s investment in Casper highlights the upheaval in the retail industry, which faces intense threats from online-only upstarts, but also e-commerce heavyweight Amazon. In fact, Walmart last September bought Jet.com for about $3bn as it looks to ramp-up its online offering.
Department stores, which are in many ways the flag bearers for the older retail model, have faced a particularly challenging year as their sales have come under pressure. The six biggest players have collectively shed $8.61bn in market value this year, according to Bloomberg data.