MotherNature.com Raises $16 Million for E-Commerce Biz

To fuel ongoing growth and help fend off big-name competitors, Mother Nature.com Inc. has raised $23 million (US$) since mid-’98, including $16 million that was just raised in a second round of financing.

Though MotherNature.com currently stakes its claim as the leading online source for vitamins, supplements and minerals, the company’s management must surely be feeling the heat from last week’s e-commerce deals announced by AOL with Planet RX, and Rite Aid with GNC.

Based on other recent announcements, it’s safe to say ey saw the competition coming.

Founded in 1995 as Mother Nature’s General Store, the company installed Michael Barach, a venture capitalist with a retail, operations, and e-commerce background as CEO in 1998. The company then smartly changed its name to MotherNature.com, and raised $7.2 million in a first round of venture capital financing.

Aside from raising capital, MotherNature.com has recently redesigned its site and hired a new marketing team. In November, they announced a $7-million marketing budget , including a $1-million vitamin giveaway for customers. Their initial marketing plan “targets the top four ‘wired’ cities in the U.S., which are, not surprisingly, the cities with the highest consumption rate of vitamins and supplements,” according to VP of marketing, Susan Rice.

These efforts seem to be paying off. Michael Barach, president and CEO said, “Our monthly sales grew 30% in December of 1998 and we are seeing a similar trend continue in January.”

Rob Chandra of Commonwealth Capital Ventures (the firm that led the recent round of financing) describes the vitamin, supplement and minerals (VSM) market as a “natural” for e-commerce, with “tremendous growth potential.”

Apparently, Rite Aid and General Nutrition Companies (GNC) couldn’t agree more. On January 8th, the two companies announced that they have earmarked $9 million for promoting their new co-branded, online store, www.gnc.riteaid.com, which is expected to be operational in October. In the meantime, GNC already offers online shopping for nutritional supplements on its main site, at www.gnc.com.

Greg Horn, GNC’s chief operating officer, explains why nutritional supplements are such a good fit for e-commerce. “Self care is an information driven category, and consumers who want to take responsibility for their own health needs tend to do their own research. These proactive customers love the convenience of researching information on the Internet.”

About MotherNature.com

MotherNature.com, Inc. has been selling vitamins, supplements, minerals, and other natural products on the Internet since 1995. The site’s online inventory includes more than 30,000 items — that’s reportedly seven times the assortment of an average natural products store.

The site also provides a wide range of free health information online, with contributions from a panel of medical experts. MotherNature.com maintains its corporate office in Acton, Massachusetts, and a distribution center in Southampton, Pennsylvania.

About the Investors

The recent $15.8 million financing includes $12 million in venture financing led by Commonwealth Capital Ventures (CCV), a prominent venture capital firm that invests in technology, health care, and other companies based in New England. While CCV usually acts as a lead investor, the firm also co-invests with other venture capital firms.

Other investors in this round of financing for MotherNature.com include Zero Stage Capital, BancBoston Ventures, North Castle Ventures and Blue Chip Ventures, Comdisco Ventures, and Dain Rauscher Wessels. Additional financing came from current investors: Morgenthaler Ventures, CMG@Ventures, Bessemer Venture Partners, Shad Run Investments and Platinum Venture Partners.

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