Birthday Opens $13M Package

The founders of Birthday credit the $13.1 million second round of venture financing the company raised last month to more than an ability to blow out candles.

The Seattle-based company, which was incorporated in 1994 and currently ships products to more than 360,000 birthday parties annually, has also allocated $12 million of its own capital to support its e-commerce business.

ARCH Venture Partners of Seattle led the Series B round, which closed last month, with a $5 million investment. Additional commitments came from Advanced Technology Ventures and Sigma Partners. Birthday raised an angel round last October. The company was originally funded by a $1.5 million investment from its Chief Executive Mike Jewell. No placement agent was used for the deal.

“Most emerging growth companies don’t have a revenue base,” Jewell said. “Our existing direct merchant operations has allowed us to become the leader in the e-commerce party supplies category.”

Proceeds from the investment will be used for the company’s e-commerce marketing campaign, which will include direct mail and advertisements in parenting and lifestyle magazines, and to expand into other celebration categories including milestones, special occasions and holiday party supplies.

Jewell said the company will either go public or become part of a larger e-commerce enterprise focused on building shopping centers or the children’s market in the next 24 months.

As part of the deal, ARCH Partner Bob Nelson joined the Birthday board of directors.

“We are always more excited about an IPO than acquisition,” Nelson said. “But if you look at how deep their customer base is in the parent demographic, it is a real opportunity for a potential acquirer to leverage into the space.”