Kibu Talks Up $22M Funding

Kibu doesn’t kid around when it comes to raising capital.

The Redwood City, Calif.-based digital destination for teenage girls recently announced its first round of venture financing in which it raised $22 million. The funding was led by Helix Ventures, a new fund created by co-founder of companies that include Netscape Communications and Silicon Graphics and Tom Jermoluk, chairman of Excite@Home. Kleiner Perkins, Allen & Co. and London-based venture firm Arts Alliance also participated in the deal.

“We decided if we are going to do this, if we are going to attack the teen market, [we] need a lot of money for product development and marketing,” said Kibu CEO Judy MacDonald. The company completed a $1 million initial seed round last year to fund research efforts and the development of its prototypical Web site. Kibu expects to launch its retooled site in May.

Prior to joining Kibu, MacDonald ran PrintPaks, which was acquired by Mattel in 1998. Based in Portland, Ore., the developer of multimedia craft tools raised a modest $7 million over two rounds of financing. Even though PrintPak products were regularly recognized for their excellence, the company was unable to overcome meager sales.

“It was frustrating because our products would win awards but generating demand was impossible on the budget we had for marketing,” McDonald said.

That’s an experience which MacDonald does not plan to revisit. Indeed, Kibu’s hefty first round placement has given her confidence that her new company will have the necessary resources to successfully court the all-important teenage girl demographic.

Jupiter Communications estimates that 47% of teens currently have Internet access. That number is expected to swell to 70% by 2003. Teen Research Unlimited estimates the teen product market was $141 billion in 1998 and $153 billion in 1999. Often described as “low hanging fruit” by online retailers, the teen market’s facility for technology and large disposable income has attracted several suitors, but MacDonald is unimpressed with their efforts thus far.

“Yes, you’ve got a big demographic, but did you deliver a product of value? Maybe,” she said. “Is your site a strong vehicle for a sponsor? Not really.”

Focusing on the first two C’s of the “content plus community equals commerce” equation, MacDonald and company are focusing their efforts on marrying their product to the existing behavior patterns of teen girls. Kibu recognizes that girls are getting online to socialize far more than they’re getting online to shop.

That does not mean, however, that the commercial opportunities are lost on MacDonald, a former marketing executive for Hewlett Packard. “The rallying cry is that if it’s good for girls then it will be good for the sponsors,” she said.

With $22 million now in the bank the company is not in a rush to talk about the next round of financing, and e-commerce’s recent slide diminishes the likelihood of an imminent initial public offering.