UrbanStems: June 2023 Update 

By Rob Runett and Brendan Mathews

UrbanStems sells flowers, plants, and gifts across the U.S., with two-hour delivery in Los Angeles, New York City, and Washington, D.C., and overnight delivery everywhere else. 

Motley Fool Ventures initially invested in UrbanStems in early 2019. Since then, we’ve participated in three additional financings for a total investment of $3.5 million. The fair value of our shares, based on the most recent financing, is $5.8M. On paper, we have a $2.3M profit.  

UrbanStems continues to evolve as consumers become more comfortable with a multi-channel approach to floral purchases. CEO Seth Goldman has spent the past six months refining his strategic vision and UrbanStems’ place among competitors such as 1-800-Flowers, The Bouqs, Farmgirl Flowers, FTD, and local options such as traditional florists and grocery stores.

UrbanStems believes it will win with a uniquely branded and hybrid approach, led by its online presence and next-day shipping, plus more same-day delivery options. The company successfully tested in Los Angeles for same-day delivery, and Seth is looking to expand into other major metropolitan areas such as Dallas and Chicago. In New York City and D.C., UrbanStems is now testing a wider geographic footprint to see how much additional same-day revenue can be added.

Although UrbanStems was very close to acquiring a successful florist in South Florida, it has put the deal on hold to focus on other major priorities for 2023. We support the decision because it opens more opportunities for Seth to turn his attention inward. He’s considering a fundraise to extend runway, a very common theme as early-stage CEOs place more attention on cash as the venture financing ecosystem is reshaping itself following the Silicon Valley Bank collapse. 

As mentioned in our previous update, Seth has been adding more capabilities to his leadership team, and that continues this year with a new SVP of supply chain. He’s hoping to add a chief marketing officer to the C-suite as well. Hiring continues in Colombia (South America), one of the hubs for UrbanStems’ floral suppliers. 

For the remainder of 2023, we’re expecting this leadership team to generate recurring revenue through the UrbanStems subscription service, learn from its Los Angeles expansion to incorporate that knowledge into other local market launches, and identify meaningful cost reductions from underperforming or underutilized services. Seth has prioritized EBITDA growth and moving UrbanStems closer to breakeven. 

Expectations vs. Results

The Foolish Bottom Line

As we head into summer, economic indicators are signaling a slowdown in consumer spending. We’re watching closely to see how UrbanStems’ leadership balances its long-standing goals of improved margins and disciplined staffing levels with its intent to move into new markets and energize its marketing with a new CMO. The next six to 18 months will greatly inform our view of UrbanStems’ capacity for growth and interest from large strategic investors and acquirers.

PREDICTION BOX: (As of June 2023. It’s just a guess, not a promise.)

Amount Invested: $3.5M

Estimated Return: $8M