It’s Not Lattes, But Schultz Wins Big From Bet on Zulily

Today is a big day for Starbucks CEO Howard Schultz, and it has nothing to do with vanilla lattes.

Maveron LLC, the venture-capital firm co-founded by Schultz 15 years ago, is the biggest investor in e-retailer Zulily, which debuted today on the Nasdaq Stock Market. Maveron’s 22 percent stake in Zulily along with the stock the firm sold in the initial public offering is worth about $1 billion after the opening-day pop, marking a 200-fold return.

When Maveron led the initial $4.6 million investment in late 2009, Zulily and Chief Executive Officer Darrell Cavens had “big plans to create the best private-sale destination offering products for kids, babies and busy moms,” according to a press release at the time. Plans were all the company had, as the following year annual revenue was just $18.4 million. In the first three quarters of 2013, that number ballooned to $438.7 million, and Zulily was offering over 4,500 products from thousands of vendors targeted at moms.

Maveron, located about a mile from Starbucks’s headquarters in Seattle, purchased 23.7 Zulily million shares for about 15 cents apiece in the initial round and then another 2.86 million shares for 53 cents each in mid-2010. Zulily rose as high as $41.32 today. Like in any IPO, with the exception of shares sold in the offering, the investors are locked up for six months, so there’s still risk that the stock could drop before Maveron can realize its gains.

Dan Levitan, who co-founded Maveron with Schultz in 1998, is on Zulily’s board. The IPO is his second in the past six weeks. Levitan is a director at Potbelly, a restaurant chain, which went public last month and has a stock-market value of about $877 million. Maveron’s 20 percent stake is worth $175 million.

Maveron is also a backer of yogurt chain Pinkberry. In a 2011 interview with Bloomberg News, Schultz talked about investing in consumer companies and their international expansion. “Consumer brands have to look at the landscape through a global lens that Starbucks started from 40 years ago,” he said.

Schultz and Levitan were not immediately available for comment.

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