Investors Bet Big on Harry’s, the Warby Parker of Shaving

For a two-year-old start-up, raising the sort of money that the online shaving company Harry's has already collected this year is a vote of confidence — and a cause for concern among competitors.

So, what's another $75 million?

That's what Harry's has raised in its latest investment round, only 11 months after it raised $122.5 million. Actually, the grand total is even higher this year: It also raised $10 million back in May.

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"We're definitely feeling good about the future," said Andy Katz-Mayfield, a founder.

Harry's Razors product
Harry's Razors | Facebook
Harry's Razors product

Harry's has earned its reputation by making the shaving process easier on men. Confronted with high prices and clunky designs from shaving titans like Gillette and Schick, the Harry's duo are trying to do with razors what Warby Parker has done with glasses. (One of the Harry's founders is a Warby Parker founder.) Its blades can be ordered without having to schlep to CVS. They're also cheap-ish: If you're a so-called occasional shaver (shaving fewer than five times a week), you can get an eight-pack of blades for $15 every three months.

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"Before we launched, there was limited choice," said Jeff Raider, the Harry's co-founder who helped start Warby Parker and a man who is practiced in the patois of a disrupter. "There were a couple of brands that dominated the market."

With its earlier investment this year (the investment is led by Tiger Global, Thrive Capital Partners, Highland Capital and Lakestar Capital), the Harry's guys actually became a tech start-up and real estate holders: They bought a factory in Feintechnik, Germany. That's where they make and manufacture their razors.

The majority (about two-thirds) of the new $75 million investment will be dedicated to expanding the footprint of the factory and hiring more employees in Germany. (Demand for their products is higher than anticipated, the founders said.) The other third will go toward stuff back on the home front: advertising campaigns, hiring a few new employees, brand awareness.

Harry's has also opened a barbershop in Manhattan. Despite the latest investment, the company does not plan to open more brick-and-mortar shops.

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As of last year, Harry's had a staff of 30 people. At the end of this year, that number is 70. By the end of next year, it expects to have a staff of 125. And if you add the employees in Germany, the number is more than 400.

Others are watching. Back in July, Jefferies, the investment bank, warned Energizer investors (the owners of Schick) that online shaving companies were making inroads. It estimated that online companies were making a "penetration" of up to 3 percent of the market and that that would most likely increase in the coming years. There have also been headlines about sagging sales within the industry.

"The speed at which customers are experimenting with new brands and willing to buy product online, that shift is happening so much faster than we ever would have anticipated," Mr. Katz-Mayfield said. "If you look at some of the analysts' reports and information that's come out that talks about the industry, it's about how it's down and hurting. But it's not hurting, it's moving. And it's moving in a direction that's great for us."

The Harry's founders wouldn't disclose sales figures but said that they would have more than five times the revenue in 2014 that they did in 2013. They also said the business was not yet profitable. Since the two are becoming good at talking to their investors and walking away with wads of cash, are they going to go back to that well anytime soon? To date, they've raised $211.5 million in 28 months.

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"The faster you grow, the more capital you need," Mr. Raider said. "Never say never, but we feel like we hopefully have a plan that'll get us through the next couple of years."