Investors just poured $500 million into Jet.com, the buzzy Amazon-killer that's now worth $1 billion
The round gives the Hoboken-based startup a $1 billion pre-money valuation. Fortune says the round isn't closed yet, so the company could raise more money from additional investors.
Previously, Jet raised $225 million at a $600 million valuation to take on Amazon - the most equity funding ever raised in the first 12 months by a US commerce company.
Jet founder Marc Lore sold his first company, Quidsi, to Amazon for $540 million in 2010. Lore has been frank about the fact that Jet will need to raise a ton of money to achieve scale.
He told the WSJ's RolfeWinkler that Jet will have to spend about $300 million on this outside merchandise-buying program over the next five years. Jet doesn't plan on reaching scale or profitability until 2020, when it projects to have 15 million paying customers and $20 billion in sales.
Jet hit over $1 million in sales on its first day when it launched in July. It was the No. 4 marketplace in terms of sales just a month after launching, beating out Sears and Best Buy. The company promises to offer prices up to 15% lower than anywhere else on the web, and developed an exclusive technology that adjusts prices in real time based on what users put in their carts.
But in October - less than three months after its launch - Jet changed its business model and dropped its $50 membership fee it once said would be its sole source of profit. The startup switched from its Costco-like model to instead try to make profit on each sale.
Lore told Re/code's Jason Del Rey at the time that the company switched business models because Jet noticed people were buying more per visit than anticipated, and dropping its membership fee could actually help widen the startup's appeal.