Why We Invested In FIGS — and Why We’re Excited About Its New Investment
by Katherine Barr, General Partner | MDV
One of our portfolio companies, FIGS, announced a great round of financing by Tulco Holdings last week. FIGS, the medical apparel company that is shaking up the world of scrubs — creating high-quality and flattering scrubs in a market that used to completely lack style and utility — was founded by Trina Spear and Heather Hasson, and we were their first institutional investor in an early seed round of financing.
Tulco’s investment in FIGS is more than a successful exit for us with a great multiple on our investment. It is both a celebration and a vindication of our faith in FIGS and its founders, whose vision to reinvent the medical apparel category was one of the drivers in our decision to become the company’s first institutional investor. In honor of this great news, I’ll share the story of Why We Invested in FIGS.
Reinventing the Healthcare Apparel Industry, One Scrub at a Time
Since our first investment in FIGS out of MDV in 2013, we knew the company was addressing a material gap in the medical apparel space. Almost one in seven U.S. workers spends a significant amount of time in scrubs. Scrubs are the uniform for many of the country’s 24 million healthcare workers, and most would agree that they are ill-fitting, unflattering and lack design as well as functionality. This huge market has been underwhelmed by the lack of stylish work-friendly options. Why? Brand, comfort and style are not the business of manufacturers who produce the scrubs, mostly for sale in small retail shops across the nation.
Heather Hasson, co-founder and CEO of FIGS, related the eureka moment about scrubs that led her to launch the company: “A few years ago I was grabbing coffee with a friend, a nurse practitioner at a nearby hospital. As my friend tugged up her sagging scrub pants for the third time, she exclaimed that she couldn’t stand her workwear but there was simply nothing else out there.”
That was in 2012. Hasson applied her design background and entrepreneurial skills to the scrubs problem, and came up with something that was rare in this highly fragmented $10 billion market in the U.S.: quality designs in technical fabrics that could take a beating but also look good. Co-founder Trina Spear brought her business chops to the company.
The FIGS success story is much more than the reinvention of the homely scrub. It’s about the highly determined Hasson and Spear, who also saw value in giving back while building a successful company.
So when Hasson launched FIGS, she was sure to include a socially conscious twist: For every set of scrubs sold, its “Threads for Threads” program would give a set of scrubs to a needy healthcare provider.
Upending the Scrubs Model
The FIGS model is different from that of most medical apparel suppliers. “Their model is to make the cheapest product — they’re manufacturers, not designers,” said Hasson. “They don’t focus on better product, which is the core of our philosophy. We want our customers to get their scrubs and feel good about them. We want them to look good in them and feel comfortable, and they do.”
FIGS is also the first company selling direct to consumers via its ecommerce site. The other major players in the scrubs market sell mainly to retailers (while about 10 percent of healthcare professionals are given scrubs by their employers, the other 90 percent purchase their own). The scrubs manufacturers who sell to retailers likely won’t follow FIGS into direct selling. “If they do,” said Hasson, “they worry the retailers may force them to pull out of their stores.” As a result, manufacturers are entrenched in the retail store model – one that is difficult from which to break away.
Since it sells online, FIGS can tap into a wealth of data about buyers. “We spend time and money on predictive analytics, analyzing who our customer is and how we can better serve them,” Hasson said. She and other FIGS leaders meet potential customers in person to raise the brand’s profile – like setting up coffee carts outside of hospitals during shift changes and giving free coffee to every medical professional that passes by.
“It’s important to know our customers,” Hasson said. “We also have a mobile pop-up shop that that we take to conferences, so we can reach thousands of healthcare professionals directly in person. And we’re the only apparel company there, right next to the medical device companies. None of our competitors do this.”
FIGS’ devotion to design and quality, and its close connections to its customers, help the company compete with Strategic Partners, which controls about 40 percent of the U.S. scrubs market. The FIGS founders are not only disrupting the medical apparel industry value chain – they’ve made the drab, poorly functioning scrub into a work uniform that’s functional, comfortable and attractive. And while they aren’t moving beyond scrubs to tap other clothing markets, they are layering on top of them, and under them.
“We want our customers to feel good on their way to work, while they are at work and when they leave the hospital,” Hasson said. FIGS is diversifying its product line with outer and underwear that includes stylish compression socks, slim-fitting hoodies and reversible vests, and seamless undergarments.
Who says you can’t love your scrubs? We’re proud of the contribution we made at the beginning of the company’s journey, and we have no doubt that Trina and Heather will continue to make a bit dent in the world of medical apparel.