The Riverside Company stitched another pattern into its arts-and-crafts quilt by purchasing eKnitting.com, the second add-on to its growing patchwork of direct-mail knitting and quilting firms. Terms of the deal were not disclosed.
eKnitting.com is an add-on acquisition to Riverside’s Keepsake Quilting investment. The first add-on was for Patternworks. The deal represents the 25th acquisition for 1998 Riverside Capital Appreciation Fund, which had initially raised $107 million, and with continued growth has now invested $110 million.
Brooke Ablon, the partner at Riverside who drove the acquisition, said the firm sees an advantageous demographic shift toward knitting, with the baby-boomer generation approaching retirement and younger participants now interested in it. Citing a recent episode of HBO’s “Sex in the City,” Ablon described knitting as “the new yoga,” having broken through its long-standing reputation as grandma’s hobby. He also notes that after Sept. 11  there has been a shift “back to basics,” with an increased focus on family, which he believes should spur growth in home-oriented activities like knitting, quilting or other arts-and-craft pursuits.
Riverside plans to pair eKnitting.com and Patternworks together, with the new purchase providing an expanded customer base and additional offerings, with just a small amount of overlap between the two companies’ products, and a strong Internet brand. “Across the board, Patternworks and eKnitting.com are complementary, which of course drew our attention to this acquisition,” Ablon said.
And while Ablon downplayed the idea that the economic dowturn played a part in Riverside’s move into arts and crafts, he did note that the sector appears to be recession-resistant. He pointed out that Patternworks has seen record growth rates in the past few years and added that the industry is expected to sustain double-digit growth rates for the next several years.
With that in mind, Riverside expects to grow eKnitting.com, along with its Patternworks and Keepsake Quilting investments, organically. The firm also said it is keeping its eyes open for other acquisitions in the direct-mail, arts-and-crafts space, with possible purchases extending beyond knitting and quilting companies.
eKnitting.com was founded in 1999 by Sarah Veit, a first-time entrepreneur and seasoned knitter with an MBA out of Stanford. She started the company with $350,000 in personal and angel funding. eKnitting.com targets the high-end knitting space, selling a wide variety of yarn, patterns, kits and other supplies.
The Riverside Company is a private equity firm that focuses on investing in the smaller end of the middle market and currently has more than $500 million of capital under management.