The archive · Commerce & Marketplaces · Financial decision · 2012
Gumroad raises $7M from Kleiner Perkins to make selling anything as easy as sharing a link
Nineteen-year-old Sahil Lavingia's Gumroad — sell any file via a shared link, 5% plus 25¢ per sale — raised $7M from Kleiner Perkins in May 2012.
Gumroad
What the business is
Gumroad let anyone sell a file or link: sign in with Facebook or Twitter, set a price, share the link anywhere on the web, collect credit-card payment — it took a 5% fee plus 25 cents per sale.
Starting capital：$1.1 million seed announced at the February 2012 launch (Accel Partners, Chris Sacca, Max Levchin, SV Angel and others).
How it started
Sahil Lavingia started selling iPhone apps at 14, dropped out of USC, worked as a designer at Pinterest and designed the Turntable.fm iPhone app. He raised Gumroad's seed round in four days, and the service launched officially in February 2012.
What happened
On 2012-05-07 VentureBeat reported a $7 million round led by Kleiner Perkins, with partner Mike Abbott joining the board; CrunchFund and Raymond Tonsing were also in. Lavingia, 19, planned to hire about one person a month, mostly developers, and said the team had shipped around twenty features in the past month, including an API. Competitors included Kout, Flattr and Sellify.
No ending yet — it is still running.
Background
Gumroad was the bet that selling digital goods could be reduced to a link. Founder and CEO Sahil Lavingia, 19, had started selling iPhone apps at 14, dropped out of USC, worked as a designer at Pinterest, and designed the Turntable.fm iPhone app before raising Gumroad's seed round in four days. The service launched officially in February 2012.
The mechanics were deliberately simple: a seller signs in through Facebook or Twitter, submits or uploads a link to any content, sets a price, and gets a link to share anywhere on the web; buyers pay with a credit card. Sellers get an analytics dashboard for views and purchases, and Gumroad takes a 5% fee plus 25 cents per sale. The company said it shipped around twenty features in the month before the round, including an API.
On 2012-05-07 VentureBeat reported that the three-person team had raised $7 million, led by Kleiner Perkins with Mike Abbott joining the board, plus CrunchFund and Raymond Tonsing — months after the February launch and its $1.1M seed from Accel, Chris Sacca, Max Levchin and SV Angel. Lavingia argued social distribution could topple the 20–30% cut of stores like iTunes and Amazon and make Gumroad a billion-dollar company, though he was mum on growth metrics and admitted no big-name partnership yet.
What has to be true
- Lavingia had lived both sides of digital selling — apps at 14, Pinterest and Turntable.fm as a designer — which made the founder story as strong as the product.
- The link-as-checkout model removed accounts and stores, and a 5% plus 25¢ fee made the business model describable in one sentence.
- Social distribution was the wedge: Facebook and Twitter links bypassed the store monopolies that took 20–30%, which is what made a billion-dollar claim arguable at all.
- The unproven part was visible: consumers were trained to expect free content, and Gumroad had no marquee creator partnership yet to show that direct sales could scale.
What can be applied
A storefront that fits in a link removes checkout friction, but the bet was cultural: enough direct sales to break stores' 20–30% cut — and with no marquee partnership yet, unproven.
Aftermath
As of 2012-05-07 Gumroad was a three-person team that had just closed a $7M round, planned to hire one person a month, and had no named big-creator partnerships yet. Nothing in this batch documents what happened after that date.
Sources
- Gumroad raises $7 million to help people sell anything they create
- HN discussion: Gumroad raises $7 million from KPCB
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