Meet Parachute, the Modern Home Textiles Company That’s Turned Home Products into Identity Purchases

Parachute, a modern home essentials company based in Los Angeles, just raised a $30 million series C round led by HIG Capital, a global growth equity firm with extensive experience scaling omni-channel brands. Having supported this great brand since its inception, we at Upfront Ventures are thrilled to welcome HIG to the Parachute family. As the first vertically integrated home line to capture audience purchases across multiple categories — bed, bath, kitchen, and baby — Parachute has already disrupted the home textiles market.

How? The company fundamentally understands what’s different about today’s modern homeowners. Like clothes, eyeglasses, and cars, the home is an extension of a person’s identity. Customers want to outfit their spaces in high-quality products that reflect their individual taste and sophisticated style — and they’re willing to pay for it. Together, Gen Xers and millennials spend about $60 billion annually on bedding and furniture.

Yet historically 90 percent of people purchased textiles in brick-and-mortar big box stores. And because the experience tended to be confusing and frustrating — the quality either just wasn’t there or wasn’t attainable — people only shopped for these items when they needed them.

It was a category ripe for innovation . An industry in need of a brand with a bold vision that could turn one-off customers into loyal repeat purchasers. Parachute is the only digitally native home essentials company delivering on that promise. In just four years, Parachute has set a foundation to build the home brand of the next century. That’s exactly why Upfront is so excited to be a part of it.

Parachute’s Beginnings: It All Started With a Unique Founder…

Many consumer founders trade sustainability for growth. In the moment, the two goals may look the same but so often growth papers over the truth, especially in categories with high repeat rates (meal kits) or enormous one-time purchases (mattresses) where marketing efficiency can change dramatically over the early years.

Not Ariel Kaye. She’s the unique founder who lives every element of the brand and the growth by obsessing over product quality and testing demand patterns on limited capital. She released short runs of product SKUs creatively to test home items like fashion items — seasonally. The company is perhaps the only one in home ever to hold price (unlike many ecomm brands, Parachute doesn’t use discounts or incentives to drive first purchases) while always breaking even or making money on the first purchase in multiple categories. Ariel went on to recruit one of the highest-performing teams in the industry from both top consumer and tech companies like Honest, Snap, Fitbit, Walmart.com, TOMS, Reformation, Williams-Sonoma and West Elm.

As a result, Parachute has grown 400% over the last two years and on 1/5th of the capital raised compared to venture-backed companies of similar size.

Why Nabbing Repeat Customers Matters in the Home Textiles Market

While Parachute obsessed over growth rates, lifetime value, and cost of acquisition ratios, it’s what one can see underneath these high-level metrics that exposes the future — the repeat rates and the purchases across categories!

In the $28-billion-dollar home textiles category, there’s a uniquely high barrier to entry — after all, people typically only buy linens once every 5 to 10 years. It’s one of the toughest categories in terms of building loyal, repeat customers, but if you can manage to do just that, it’s also one of the most lucrative share of wallet categories that exists behind health care, shelter, and food. Parachute has proven that building an aspirational brand and capturing a loyal audience can spell many thousands of dollars in purchases over a consumer’s lifetime. In fact, Parachute customers repeat home purchases three to five times more frequently than customers of other home goods brands.

The Parachute team had an early obsession with winning all of home and viewed its first textile category as a trojan horse rather than the end game. Ariel built a deep customer insights/persona approach that involved sourcing high-quality product and testing different types of products to acquire customers in some cases, and retain them in others. The goal was to retrain customers to think of home like they do fashion, and dramatically increase purchase rates once customers found a brand that understood them and spoke to them seasonally through social media and through friends.

Parachute quickly understood which of their potential customers was more likely to buy a bedroom product versus a bath product versus a seasonal collaboration product first. From day one, the brand wedded its SKU release strategy to an acquisition strategy. Once a customer makes an initial purchase, Parachute immediately obsesses over repeat rates and the buying journey that specific customer will take through rooms in their house and stages of their lives. And this is why Parachute sees their best cohorts at over 50 percent repeat rates.

As the startup D2C home market has matured, Parachute has demonstrated there’s a difference between buying a mattress (the foundation under your house) and buying sheets, towels, baby swaddles, and tablecloths that “dress” your home every day (your identity). The difference can be seen in Parachute’s repeat rates over years and across categories and in the diversity of its customer base (age, geography, psychographic). It can be seen in detailed analysis across NPS relative to industry, customer equity and basket diversification analysis. In fact, in one detailed brand/customer study, Parachute was described by a 20-year veteran consumer investor as “one of the most pristine brands” he had ever seen.

Parachute’s Winning Product Strategy and Technology-Forward Approach

Parachute products are instantly recognizable for their unfussy style and natural, So-Cal-inspired color palette. It’s beautiful, aspirational, cool stuff that customers want to show off, just like they show off their Warby Parker eyeglasses and Glossier makeup. Now they’re seeing their bed sheets and towels as markers of taste, too, and dressing their beds like they dress themselves — with new items every season. And they’re rushing to post their latest Parachute purchases on social media.

Every new Parachute customer is acquired through an extensive multi-touch process built on the back of its technology platform which collects insights across both digital and physical touchpoints. The initial marketing approach has been unusually disciplined, with subtle calls to action, extensive testing across channels, and firm pricing. As a result, Parachute’s acquisition costs have been extremely stable over four years and its repeat purchase rate only heads in one direction — up.

When cost of online acquisition are as high as they are in home, building a large base of repeat purchasers and the marketing knowhow to get there is perhaps the biggest moat. For a new entrant to come into any category in home textiles, they will have to raise enough capital and, more importantly, develop the product/marketing knowhow and customer file to generate repeat purchases.

No category-defining “marketing tricks” remain. Winning in this category requires great products and blood, sweat, and tears across multiple functions — exactly what we’ve seen from Parachute

Congratulations to the Parachute team on the new round. I look forward to buying my future grandkids Parachute for their first home. My lifetime spend is high and has only just begun!