Power Pitch

Start-up delivers flowers on demand

Start-up delivers flowers on demand
Start-up delivers flowers on demand

Sending flowers is common practice for saying "thank you" or "just because." However, co-founder of flower delivery start-up UrbanStems, Ajay Kori, said, "Sending flowers online today relies on a really inefficient process that can be really frustrating." He said his on-demand delivery start-up aims to nip those inefficiencies in the bud.

Watch the above video to see Kori pitch his start-up to a panel with Kelly Hoey, an angel investor and advisor to early stage companies, Kanyi Maqubela, venture partner at Collaborative Fund, and Jenny Lefcourt, partner at venture capital firm Freestyle. Will this start-up blossom, or will the panel nip it in the bud? Watch the video to see what happens.

Quality flowers quickly

Kori said he first realized the online floral industry was broken when flowers he ordered for his girlfriend's birthday never arrived. He said the flower company's error almost cost him his relationship. This ordeal led him to team up with friend and co-founder Jeff Sheely. Kori and Sheely said they want to tackle the floral industry's biggest problems: high costs, low-quality flowers, unreliable delivery and a lack of transparency. Their solution: UrbanStems.

Unlike other online floral companies that rely on multiple parties to fulfill an order, UrbanStems has built its own supply chain. "Our flowers come directly off a hill in Ecuador and Colombia, are rehydrated and packaged in our signature burlap here in the U.S. within 48 hours of being cut, and are zipped out to recipients in under an hour with a 100 percent bicycle courier force," Kori said. The UrbanStems delivery areas currently are New York City, Washington D.C., and Arlington, Virginia.

UrbanStems offers three seasonal bouquets at a time on its website. The bouquets are priced competitively from $35 to $55, and delivery is always free.

A flower arrangement ordered through UrbanStems.

Sowing the seeds of growth

During the segment, Maqubela asked about the cost of customer acquisition, and how UrbanStems plans to compete with the industry's front-runners.

"We're less than half the price of traditional players," Kori said. He added that customers receive a notification that their orders are right at the recipient's door.

Lefcourt then asked how much UrbanStems makes on a typical bouquet delivery.

"Because we've cut so many of the middlemen in this process, we actually have quite high margins, close to 50 percent," Kori said.

According to market research firm IBISWorld, there were 3,715 operational online flower shops in 2014. This included industry leaders FTD and 1-800-Flowers.com. Despite the crowded space, Kori said UrbanStems has been growing by double digits month over month.

So far it has raised $1.5 million from Middleland Capital, NextGen Angels, Sagamore Ventures and Great Oaks Venture Capital.

According to the co-founders, the start-up will be planting its seeds in more U.S. cities sometime this year.

They would not disclose specific revenue figures, but said UrbanStems expects to be profitable by the end of 2016. Headquartered in Washington, D.C., and New York City, the company has nine employees excluding its bike couriers.

—Comments, questions, suggestions? We'd love to hear from you. Follow us @CNBCPowerPitch and join the #PowerPitch conversation.