College seniors skip class for plenty of unproductive reasons, but not Allen Kim. An industrial operations engineering major at the University of Michigan, he and Luis Calderon have been playing hooky to persuade investors to part with around $500,000 for Bebarang, their startup that Kim describes as a "Netflix for baby clothes." (In fact, we chatted with them on a drive back from some pitch meetings in Chicago.)
Kim's "aha" moment: Last year, "my aunt, who had a baby, was complaining about how expensive baby clothes were. And I love Netflix. I thought there had to be a way to combine these two things."
After some serious research, which included discussions with more than 100 moms, it really came down to the numbers.
"It's a $25 billion industry," Kim says. "The average kid outgrows baby clothes 16 times, which works out to be about $150 every two months on things that might be worn just a few times."
Party clothes cost the most but are worn the least. Bebarang offers special occasion baby clothes from premium designers like Burberry and Ralph Lauren.
"Moms will save money, and their babies will still look great," he says. "It's a win-win."
The rental rate for new clothing items is 50 percent off the retail price. For example, a Burberry infant polo dress would rent for $25 a month. ("Gently used" rentals are as much as 80 percent off retail.)
Kim and Calderon hope to officially launch their website this quarter, and they will use the $500,000 in capital to lease a distribution center, build up inventory and brand relationships with baby clothing companies and hire manpower to support roughly 1,000 customers for at least a year.
Their beta site already is off to a good start. Hundreds of moms are signed up, and the rental model seems to be working. A downside? "My apartment is a sweatshop," Kim admits. "My roommates are always complaining about having baby clothes everywhere."
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This article was originally published in the January 2011 print edition of Entrepreneur with the headline: The Envelope Please... The Entrepreneur of 2010 Awards.
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