Massdrop, a hybrid community startup raises $40 million in Series B funding

By | August 14, 2015

Massdrop, a hybrid community and e-commerce startup has raised a funding of $40 million in Series B round led by August Capital along with other investors like First Round Capital, Mayfield Fund and Cowboy Ventures.


Started in 2012, the startup Massdrop is a community driven ecommerce company that allows customers who enjoy things like high-quality audio, men’s fashion and quilting to get in touch with other people who are interested in the same to discuss and make group purchases. In the last one year the user base of the community has increased seven times and now has reached around a million users with the expansion of each community on the website.

Many companies have found initial success in e-commerce but hit a plateau where they can no longer drive growth through paid acquisition alone,” said David Hornik general partner in August Capital. “By fostering and engaging the community, rather than buying one, Massdrop has pushed through this plateau and continues to grow its user base.”

The co-founder and CEO of the startup Steve El-Hage plans to add four more communities before the end of 2015 and continue adding new communities every month in 2016. Apart from just adding communities he also plans to put forward more content like in-depth reviews or DIY tutorials. “There is a lot of awesome content being written in each category that’s not being surfaced or matched with appropriate viewers,” he said.

With the fresh funds, Massdrop plans to widen the existing products and to improve the originality of the content for the company’s site. Series A round of funding took place last year where the company raised $6.5 million.

Well, community driven business model is not all that new. Other community driven product development company Quirky which even had a different model also tried to bring together community and commerce through crowd sourcing but unfortunately it did not work. El-Hage’s take on this business is quite different for he does not produce products or spend money for it but the company works as a mediator or facilitator between the vendors and customers. Unless one sees the connection between the ultra light outdoor gear and quilting, the communities of Massdrop may seem to some random stuff.