This start-up delivers flowers from the side of a volcano in Ecuador for $40

How this eco-friendly startup flower service uses success as motivation
How this eco-friendly startup flower service uses success as motivation

The Bouqs Company is trying to overhaul the flower industry to make it more efficient and sustainable. Its sell? Being a cheaper, better-quality option.

So far, the play is working. Founded in 2012, the Venice Beach, California-based flower delivery start-up has been growing at a rapid clip. It's raised almost $20 million in venture capital, has 50 employees, works with 50 farms and 300 florists, and delivers to all 50 states.

Co-founders John Tabis and Juan Pablo Montufar, now in their late 30s, met playing in a band together in college at the University of Notre Dame. Montufar, from Ecuador, moved back home to raise a family. He was working for a flower company there when he saw the innards of the flower delivery supply chain.

Typically, flowers are cut in massive quantities, transported to the U.S., held in refrigerated storage where the flowers get old and often die, delivered to flower shops where they are held longer, and then finally arranged and delivered to the customer. One-third to one-half of the flowers die before they are ever delivered.

The Bouqs Company founders JP Montufar and John Tabis.
Source: The Bouqs Company

Montufar, with his Notre Dame MBA, and Tabis, with his Bain & Company consulting experience, decided they could improve the inefficient flower-delivery market, which also wasn't doing particularly well — revenue has been falling for florists since the Great Recession, according to an industry report from the market research company IBISWorld.

With $13,000 in a hacked together "friends and family round," the co-founders launched in November 2012. They had an intern build a website and exchanged equity in the company for graphic design help.

In 2013, the team joined the business accelerator Amplify.LA and raised $1.7 million. The next year, the founders left reality pitch show "Shark Tank" empty-handed but closed a Series A funding round of $6 million.

A key advantage for The Bouqs Company is that flowers are cut only when they are ordered. That eliminates waste and the energy and resources involved in storing flowers. Also, it means that flowers arrive at the customer's doorstep much fresher than they otherwise would.

A US Farm provider for the Bouqs Company.
Source: The Bouqs Company

Cutting out the middlemen also means that Tabis and Montufar can significantly cut down costs. Flowers from the side of volcanos in Ecuador and the hills of Colombia arrive in the U.S. in five to seven days and start at $40. Orders cut in the U.S. start at $50 and can be delivered the next day. Bouquets made by partner florists start at $60 and can be delivered in two hours.

Those savings are passed on to the consumer. At The Bouqs Company, two dozen red roses cost a flat $55. And at 1-800-Flowers, two dozen red roses cost $119.99, plus a $17.99 service charge.

In addition to speed and price, The Bouqs Company says it also buys flowers only from ethical farmers who pass third-party certification processes for paying living wages and providing child care, health care and education programs. It says farmers are paid 20 to 25 percent more than they are by other flower retailers, incentivizing them to supply The Bouqs Company with their very best stems.

"We are really trying to make this thing very big with the idea of having a platform that rewards the farmers and the florists to do it the right way," Tabis told CNBC.

A flower farm in South America.
Source: The Bouqs Company

Local florists are also paid a percentage of revenue made off each order, which ends up being much more than the slim margins they make from filling orders from larger flower warehouses.

"Our overall goal means that we are going to push better economics back to those farmers and to those florists that want to work with those farmers and in that way create a greater good in the world," Tabis said.

So far, their plan seems to be working. In February, The Bouqs Company closed a $12 million funding round. It currently has 50 employees and is growing quickly. (The company declined to disclose revenue and profits.)

The way the founders see it, operating the way they do is just the right way to do business. And the way they have built the company, farmers and florists win when they win.

"If we are successful, we have impact that is positive beyond just the positive economic impact of the business," Tabis said.