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Craft kit startup Darby Smart raises $6.3 million to beat Hobby Lobby on the web

May 14, 2014

FORTUNE -- Craft supplies is a $29 billion industry, but it's fragmented. The big brick-and-mortar players -- Michael's, Jo-Ann Fabrics, Hobby Lobby -- have a minimal online presence, and in the words of Nicole Shariat Farb, "don’t approach the market with the mindset that savvy e-commerce players would." Michaels, for example, only began selling goods online for the first time this month.

Farb, an investment banker at Goldman Sachs, became obsessed with this gap. Obsessed enough to quit her job to start a company over it. (Some of her former colleagues thought she was leaving to start an Etsy store. "People would ask me, 'How is the crafting going?'" she says.) That company became Darby Smart.

In 2013, she raised $1 million from Maveron, Forerunner Ventures, Dave Gilboa, co-founder of Warby Parker, Novel TMT Ventures and Vivi Nevo to get Darby Smart off the ground.

A year later, Darby Smart has attracted 2000 designers who create projects on the platform, attracting 100,000 unique monthly visitors. Visitors can purchase the supplies and instructions for each project in a kit. Darby Smart rounds up the supplies from 400 US-based suppliers, packages them in a box, and sells that specific project kit to the customer. Sales have grown by 70% month over month, Farb says. Darby Smart gives creators a 10% cut of sales of their kits.

Some designers create projects as a part-time job. Others spend a few hours a week creating projects and see it as supplementary income. Because many of the creators are influential on Pinterest, Instagram and their blogs, there is a built-in layer of promotion.

That includes Erin Gardner, a pastry chef and proprietor of a custom cake studio called Wild Orchid Baking Company. She was attracted to the site because it solved a problem for her: It rewarded her for coming up with projects. "With the popularity of sites like Pinterest, creative projects and ideas spread like wildfire, but seldom offer any reward to the individual who came up with the idea," she says. Now she gets more than "pinning bragging rights" for her project -- she gets cold hard cash.

Currently Darby Smart offers home and accessory projects like chalkboard planters and malachite stone napkin rings, but it will expand into weddings and food-related crafts next (think cake pops). It isn't the only company going after a piece of the digital Hobby Lobby and Jo-Ann Fabric's pie. Whimsybox sells a craft-of-the-month subscription. For the Makers delivers curated DIY supplies. But most others are approaching the problem from the content side. Brit + Co., which raised $7.6 million in venture funding, briefly sold monthly "Brit Kits" but has stopped offering those.

Darby Smart's investment will go toward expanding its team from nine to 18 people this year. David Wu, a partner at Maveron, noted that Darby Smart has engaged an untapped customer category. The company's platform "bridges the gap between the craft store, online DIY influencer, and the customer," he says.

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