Investors Betting on Your Bedroom

New York-based Casper is mobilizing its mattress e-commerce business, bringing in over $20 million in revenue in the first year. CEO Philip Krim explains how they’ve managed to get big investors, including Ashton Kutcher, to back their startup dream.

In the latest attempt to transform e-commerce, mattress startups are springing up throughout the United States. The “bed-in-a-box” businesses are hoping that the cumbersome process of department-store mattress shopping will inspire consumers to buy online.

One startup that is gaining traction is New York-based Casper, which sold over $20 million worth of mattresses in its first year. The year-old startup already has a reported $500 million valuation and has secured a long-list of notable investors including New Enterprise Associates, SV Angel and even actor Ashton Kutcher.

“Casper took a terrible consumer experience, and turned it into a dream,” said Ben Lerer, who invested in the startup through Lerer Hippeau Ventures. “Casper struck a nerve with a massive consumer base disillusioned with the archaic and overpriced mattress industry.”

Price point is a differentiator -- a queen-sized mattress on Casper sells for $850, considerably less than a Tempur-Pedic mattress, or some of the other high-end brands. And while many customers prefer to test out mattresses before buying them, most of these startups are offering free trials, letting customers try it before they buy it.

“Laying on a bed for 30 seconds in a showroom when you’re fully clothed just doesn’t tell you if it’s going to provide you with a great night of sleep,” said Casper CEO Philip Krim, in an interview with FOXBusiness.com. “We believe that the only way to know if a mattress is right for you is to sleep on it.”

"The online mattress market is rapidly growing and gaining more traction with the mainstream buying public especially as companies offer risk-free trials,” said Scott Paladini, founder at Bear Mattress, which offers a 100-night free trial program, similar to Casper’s.

But with a growing sea of competition, which also includes Tuft and Needle, Leesa and Yogabed, it is unclear whether there will be room for all of the mattress startups entering the online marketplace. And it remains be seen whether the generous return policies will result in wasted supply.

What is clear is that the potential customer base is endless because everyone needs to rest. “More people are realizing that when they invest in a good night of sleep, it really changes their entire life,” said Krim.