Brown Shoe Incubates Jack Erwin

Brown Shoe Co. is dipping its toes into incubation waters.

The $2.51 billion footwear firm has made its first investment, in tech startup Jack Erwin, an e-tail footwear firm. Diane Sullivan, chairman, president and chief executive officer of Brown Shoe, declined to disclose the size of the investment, but Brown led the $9 million Series B funding round. Other investors include Crosslink Capital, Shasta Ventures and FundersGuild. Crosslink was also Jack Erwin’s seed investor. The startup footwear firm raised $2 million in a Series A round in February.

Founded by Lane Gerson and Ariel Nelson in August 2012, the collection became available in October 2013. The premise of the line was to create classic, dressy men’s shoes at a cost of $100, but retail for $200 a pair. Similar products from competitors retail at higher price points, often between $500 to $700 a pair.

Sullivan said she first heard about the firm from her son-in-law, who bought a pair of Jack Erwin shoes, and then she “started to pay a little more attention to what these guys are doing. This is a great incubator brand for us, with great growth potential. We are really starting to look at more of these smaller brands [to] take small investments in them.”

This is the first time Brown Shoe has made an investment in an early-stage startup. Previously the company has preferred to make partial acquisitions, as it did with a minority position in Sam Edelman before acquiring the whole brand. Sullivan said the Jack Erwin stake is a learning opportunity for Brown Shoe in understanding a different business model. She also said the company would consider other incubation ideas both in footwear and in related businesses, such as hosiery.

Eric Chin, a general partner in the venture capital group at Crosslink Capital, said, the e-tail footwear firm is “one of the superstars in our seed program.” He added that the attraction to Jack Erwin as an investment was both due to the innovative thinking of its founding team and its “different approach towards delivering a better product to consumers.”

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