Allbirds is a footwear and apparel company with roots in both New Zealand and the United States. The brand is famous for its understanding of consumer interests in environmentalism and is focused on using sustainable materials and practices in its products. Headquartered in San Francisco, the company started in 2015 with comfortable, eco-friendly, slip-on wool sneakers. The name Allbirds is a nod to New Zealand which has barely any native land mammals – therefore, their native animals are all birds.
One thing that is unique is that their shoes are logo-free – this has been popular with celebrities such as President Barack Obama and Leonardo DiCaprio, who invested in the company. They started as an eCommerce, direct to consumer company; but they have opened some physical stores as well. They have branched out into additional product lines and are now in talks considering an IPO to assist in their growth. The company was last valued at $1.7 billion.
TL;DR
- Allbirds was founded in July 2015 by Tim Brown and Joey Zwillinger who still lead the company
- Initial focus was on their logo-free, wool sneakers made from eco-friendly materials with transparent, sustainable processes
- Total fundraising has been $253 million and includes investments from companies such as Fidelity, T.Rowe Price, For Good Ventures, Lerer Hippeau and Franklin Templeton Investments.
- Sales information unavailable for this private company; but theyve consistently been profitable from the beginning.
- Industry experts estimate 2020 sales revenues to be approximately $83 million.
- No known lawsuits or ethical issues against the company
- They are considering an IPO to fund their growth. Their last valuation in the fall of 2020 was $1.7 billion.
- On June 29, 2021 Allbirds officially filed for an IPO valuing the company at $2 billion.
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Allbirds at a glance
Allbirds was founded in July 2015 by Tim Brown and Joey Zwillinger. Tim Brown is a former soccer star in New Zealand and Joy Zwillinger is a biotech engineer and renewables expert. Brown first came up with the idea while he was vice-captain of the New Zealand football team. He also attended business school and used to make leather shoes for friends. While they may have looked stylish, they werent comfortable and that stuck with him. In 2014 the Wool Industry in New Zealand funded a research grant for him to develop a wool-based sneaker. He took his idea and used Kickstarter to launch it. It was so popular that he raised over $100,000 in five days. After a successful Kickstarter launch, Brown teamed up with Zwillinger. At this point, they began creating their company processes and launched Allbirds officially in March 2016. The two founders remain at the helm.
They started as a direct-to-consumer eRetailer with one shoe product offered. They have since expanded their offerings. The vision always included sustainability and carbon neutrality. One of the worst offenders of the environment from a consumer product standpoint is shoes, Zwillinger said in an interview with the Times in 2017. Its not the making; its the materials.
They had some early recognition and accolades. In 2016 after their first style, the Wool Runner, made with super-fine merino wool, was launched, Time Magazine crowned them the worlds most comfortable shoes. Their glowing article was entitled, The Worlds Most Comfortable Shoes Are Made of Super-Soft Wool. The New York Times noted that they were becoming a mainstay in the minimalist look of Silicon Valley. And in 2018, The New Yorker devoted two stories to Allbirds, one of which emphasized its eco-friendly aspirations. And its newest product, the Dasher – a performance running shoe – was named one of the 100 Best Inventions of 2020.
Allbirds tagline under their running shoes on their website says, Break a Sweat, Not the Planet – touting their shoes made from natural materials. When they started, their goal was to create a brand new category of shoes made from natural materials and via business processes that were sustainable and carbon neutral. Their mantra is to create better things in a better way. There are three parts to embodying this mantra which is the basis for their foundational principles: simplicity in design, confidence in comfort and made from nature. You can see this applied to each of their products. You can also see it in how they give back. In addition to their transparent, sustainable business practices, they donate lightly used Allbirds to SOLES4SOULS to help individuals in need. Also, their recycled packaging is its own innovation. They use 90% post-consumer recycled cardboard that serves as a shoebox, shopping bag and mailer all in one. Additionally, while their stores were closed, they continued paying the retail workers because they value their employees. They also donated about $1million worth of shoes – about 10,000 pairs – to front line workers during the pandemic.
While the sales history is not publicly available, the CEO states they have been profitable since day one. Industry experts estimate their 2020 sales revenue to be just over $83 million. In addition to their original Wool Runner, they have also introduced water-repellent trainers, socks and a performance running sneaker. They started off as only an eRetailer, but have since opened up physical stores and look to continue adding more outlets. They are growing well in the Asia-Pacific region, including in markets newer to them such as Japan and South Korea. Like other industries, they were impacted by the global COVID-19 pandemic. However, company spokespeople still say they have maintained profitability.
They have 23 stores in major metropolitan areas including San Francisco, Chicago, Boston, Seattle, Philadelphia, D.C., Amsterdam, London, Berlin, Shanghai and Tokyo where they sell sneakers and apparel. In addition to being able to shop in their stores, their website and app are key outlets for sales.
Allbirds fundraising to know about
Since its founding in 2015, Allbirds has raised $253 million in five rounds of funding. Heres a breakdown of the key Allbirds fundraising over the years:
- Seed Round: March 2016, $2.3 million, valued at $7.3 million
- Series A: July 2016, $7.4 million, valued at $32.25 million
- Series B: July 2017, $18.5 million, valued at $367.7 million
- Series C: October 2018, $50 million, valued at $1.4 billion
- Series D: December 2019, $75 million, valued at $1.73 billion
- Series E: September 2020, $100 million, led by Franklin Templeton, valued at $1.7 billion
Path to the Allbirds IPO
Within three years of starting, Allbirds achieved unicorn status.At the time, 2018, Zwillinger stated that at that time, an IPO was not desirable for a variety of reasons. Matt Powell, a senior industry advisor at The NPD Group, a market research firm, states that he believes Allbirds will be around for a long time and needs an IPO to bring additional cash for expansion. He noted they have prudently controlled growth and have cutting edge products.
The company plans to open new stores, and expand its product offerings to have lower priced items. Additionally they have embarked on a partnership with Adidas AG on a 0 carbon footprint shoe. Thats the goal herenot to be a niche player selling premium products to rich people who care about the environment, Zwillinger said. We have sustainability for the masses. Originally only a footwear company, its apparel offerings have grown considerably, positioning itself to become an all-body brand with offerings from underwear to puffer jackets and everything in between.
When is the Allbirds IPO date?
Allbirds has not filed yet nor has any SEC paperwork been released to the public. Reportedly, investors and SPAC-companies have been calling them. Its major investors are Elephant, Fidelity Management & Research Company, Lerer Hippeau, Maveron, Tiger Global Management, and T. Rowe Price. None have released official statements.
Related: What is a SPAC?
Telling is the fact that in March 2021, the company began advertising to hire an SEC Reporting and Technical Accounting Manager with IPO experience. In April 2021, sources close to the company said that Allbirds is beginning to interview potential banks to lead the IPO. A date is as yet unknown.
What investors should know about the Allbirds IPO
All investments have risks. Let’s explore what type of risks investors might need to consider with an Allbirds IPO. Company sales revenues are unknown but the company spokespeople say that the company is and always has been profitable. During the pandemic, Allbirds did have to temporarily close its retail stores but overall, they have experienced growing interest in its products. They even launched a new product – a running shoe – in 2020, which means it is now competing with larger brands like Nike. Additionally they have expanded their apparel line to include underwear, socks, sweaters and jackets.
The company has not been accused of any controversy but they did sue brand giant Steve Madden in 2017 for marketing a wool shoe that looked identical to Allbirds original iconic offering. In fact, they have had to aggressively protect against trademark infringement. The more successful they are in the market, the more copycats will emerge and this will continue to be something that needs to be watched. The Steve Madden lawsuit was settled out of court. Allbirds similarly sued the Austrian footwear company, Giesswein Walkwaren with similar results. However, now that Amazon has a similar shoe, Allbirds instead has opted to use the intellectual property infringement as an opportunity to emphasize that Amazon, one of the most resourced companies in the world, does not use sustainable business practices. It is one thing for the company to pursue legal actions against other small, similar brands; but the start-up company does not have the resources to fund a legal fight against Amazon. Some investors may see Allbirds leaderships decision to not pursue that expensive fight as wise and an avoidance of unnecessary risk and expenses.
Since it has expanded into apparel and into performance running shoes, experts are concerned about the challenges Allbirds will face trying to manage shareholder concerns with squaring off with sportswear giants like Nike, Adidas and Under Armour. With annual sales revenue around $83 million, Allbirds is currently dwarfed by Nike at $37 billion in annual revenue and Adidas at $20 billion in annual revenue. However, Allbirds has a niche and focus that is slightly different from those companies. A big focus for us is to try and make better products with less environmental impact, said Allbirds co-founder Tim Brown in a recent CNBC interview. The business has been extraordinarily resilient through a difficult period of time. Adidas, Nike and Under Armour are all publicly traded companies. Other competitors include Rothy and Neemans.
The company is considering opening additional stores and looking to continue its growth in the Asian-Pacific market. They currently have 23 locations and have a goal of increasing that by 25%. They are aiming for new stores in China and Japan. Between their physical locations and their e-commerce site, the companys products are sold in 30 countries. While it is a footwear and apparel company, Allbirds is a digital native with its roots in e-commerce. Industry analysts believe that with Allbirds effective market messaging, environmentally friendly focus, innovative products are positioning it well for continued growth. The company shares the carbon footprint of every product – for example, a mans puffer coat has a carbon emissions level of 25kg. The company has made unique moves such as offering footwear made from eucalyptus tree fibers in 2018. The apparel lines launched in 2020 are all made of sustainable materials. Its new running shoe launched in May 2021 has a sole made from sugarcane and its mesh upper uses eucalyptus wood pulp. Still it is a risk because, according to Simeon Siegel, a retail analyst at BMO Capital Markets, most consumers arent swayed by environmentalism in their fashion choices. People are more influenced by what makes them feel either comfortable, special or both. Changing people into consumer activists will take some marketing work. Still, surveys of consumers in the 20-40 age range consistently show they are interested in purchasing products that are made sustainably and with fair labor practices.
Another area of expansion is that Allbirds has invested in other companies before. To date, they have invested varying levels of funds into five other companies: Ophelia, Natural Fiber Welding, Yaguara, Kindred and Yumi.
Allbirds is a certified B corporation which means they have set their company up to be required to balance both profit and purpose. As part of being a B Corp, they must publicly create and share impact reports on how the companys existence impacts the environment or society at large. According to Zwillinger, being a B Corp that delivers on its promises could make it even more attractive to investors for an IPO and for money managers who steward investments in the sustainable investing sector. The company has actually shared some of the business practices to encourage others in the industry to increase the sustainability of their own business processes. They are staunchly committed to lowering their environmental impact at every level. Their manufacturing process uses 60% less energy than traditional shoe manufacturing processes.
The direct-to-consumer product industry has been growing as pandemic restrictions have eased. Additionally, the stock market is running at all time highs, so its a great time to consider an IPO. Expansion always carries risks as the company must learn and navigate each countrys legal and business environments for operation. However, with its digital footprint, it makes it possible for the company to expand into additional markets before and without investing in expensive infrastructure and buildings. According to research done by Facts and Factors, the worldwide Athletic Footwear market is expected to grow at a rate of 3.5% from now through 2026. Allbirds is positioning itself to benefit from the general industry growth trends.
Bottom line
Allbirds is considering an IPO as early as 2021 as it interviews banks and SPAC companies to determine the wisest course of action. While no one is exempt from risk, Allbirds will benefit from the trends in the Athletic footwear and apparel industry as well as the post-pandemic marketplace. If Allbirds continues to innovate in its product offerings and have marketing that reaches its target market, there is potential for gain.
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