Toysrus.com Plays With $60M Investment

Never let it be said that you can’t go home gain, at least if home is in the venture capital market.

Less than a year removed from its well-publicized split with Benchmark Capital, Toysrus.com received a $57 million investment from Softbank Venture Capital and Softbank Capital Partners. In addition to funding the clicks, Softbank also pumped some money into the bricks by purchasing 1.2 million shares of Toys “R” Us Inc. for $10 million at a price of $13 per share.

John Barbour, chief executive of toysrus.com, said that the difference between this transaction and the failed partnership with Benchmark was that the Web-based product was a proven commodity this time around, whereas it previously had been a relatively untested concept.

“Now it’s an investment in a known company with a strong management team and strong market presence,” Barbour said.

He added that the partnership with Softbank would help toysrus.com capitalize on its global brand name through the venture firm’s extensive knowledge of international retailing and its impressive portfolio of global companies. “We will apply as much power as we can from [Softbank’s] portfolio as we can toward the Toys “R” Us brand,” he said.

While Softbank was the primary investor in the first-round financing, a trio of private equity firms also took small equity stakes in toysrus.com. The Blackstone Group, Kohlberg Kravis Roberts & Co., and Evercore Partners each committed $1 million to the company in exchange for minority ownerships.

“We are looking at this as a long-term business, and all of our minority partners can help us build it,” Barbour said.