Jessica Alba's New Baby: A Start-Up

By TANIA KARAS

The Pitch:

While other celebrity investors flock to the latest hot start-up, actress Jessica Alba has gone a step further: She started her own. Alba says she launched The Honest Co., an online retailer of eco-friendly baby and home products, because of her inability to track down certain items for her two kids. "There was a huge market gap, and I felt that we could offer young, modern moms what they craved," the actress tells us. Alba, who now serves as company president, invested her own money in the business (she won't comment on how much) and in March, three major venture capital firms put together a $27 million round of initial funding.

The Business:

Alba brought in several cofounders, including serial entrepreneur Brian Lee (founder of online legal-services firm LegalZoom and accessory seller ShoeDazzle) and Sean Kane, former business development executive at price-comparison site PriceGrabber .com. Honest uses a subscription model where buyers pay a monthly fee starting at $36 to receive 12 "bundles" of all-natural diapers, shampoo or detergent a year. This setup helps provide a predictable revenue stream, analysts say.

The Strategy:

For a first-time entrepreneur, bringing in seasoned partners is a good move, says John Giannuzzi, managing general partner of venture firm Sherbrooke Capital. In fact, one VC backing Honest says he invested in part because of Lee's involvement. Targeting a niche within a fast-growing market, such as the $11.8 billion natural-personal-care and household-product industry, can also help attract investors. Of course, having Alba's name recognition doesn't hurt either.