Grand St.

Etsy buys Grand St.

April 23, 2014: 2:14 PM ET

The handmade marketplace has acquired Grand St., a commerce site for indie electronics.

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FORTUNE -- Etsy, the operator of a handmade marketplace, has acquired Grand St. Grand St., which sells indie electronics online, had raised $1.3 million in seed funding from First Round Capital, Betaworks, Quotidian Ventures, Mesa+, and angel investors. Just two months ago, the company had positioned itself as the "Etsy for electronics." From my interview with CEO Amanda Peyton at the time:

Peyton welcomes the Etsy comparison, because she essentially wants to do the same thing for electronics. "DIY has always been a well-known category, but [Etsy] has really, really defined the category," she says. "It's something we certainly aspire to -- take this nascent category and show people this is not just a bunch of niche products, but that this is the future of electronics.

February was when Grand St. launched its own version of a marketplace where indie electronics companies could sell their wares. The company had just crossed the million-dollar mark in sales. The marketplace was well-received, Peyton says, and Grand St. had a new round of funding lined up.

But then, Grand St.'s founders were introduced to Etsy CEO Chad Dickerson, and they hit it off immediately, Peyton says. A deal was struck over the last two months. The companies won't merge their marketplaces, though Grand St.'s eight employees will join Etsy at its Brooklyn headquarters.

Etsy currently sells electronics on its site, with items ranging from guitar pedals to handmade speakers, Dickerson said. That the site is known as more of a marketplace for home goods, jewelry, and other crafts, points to "a misunderstanding about the variety of things on Etsy," he says. Etsy has no plans to expand into other categories through acquisition. This is the company's fifth acquisition; the other four were integrated into Etsy, and Grand St. will be the first to maintain its brand and independent product.

The benefits of such a deal, Dickerson says, are that the two companies can learn from each other. Grand St. will teach Etsy about the world of indie electronics, which often involves things like pre-orders and beta periods. And Etsy will teach Grand St. about scale.

"Something that has really changed in the market is people now think of electronics as a creative pursuit, and I don't think that's always been true," Peyton says. "The evolution around creators moving into making interesting small batch electronics is something that's just beginning, and it is starting to grow."

Recode notes that the deal valued Grand St. at less than $10 million.

From Etsy's Blog post:

Today, we're excited to announce that we're acquiring Grand St., the marketplace for creative technology, subject to closing conditions. Grand St. connects independent hardware makers with passionate buyers, harnessing a wave of innovation happening outside the mainstream consumer electronics industry.

What unites Etsy and Grand St. is a shared vision of the way making is changing, and we're excited to learn from their community. The team behind Grand St. -- including co-founders Amanda Peyton, Joe Lallouz and Aaron Henshaw -- will join Etsy but continue to operate the Grand St. marketplace in the near term.

As we've seen here at Etsy, shoppers are increasingly interested in unique and innovative goods, especially when they know and can be involved in the story behind the product. At the same time, it's becoming easier than ever for independent makers and designers to bring ideas to market and find a global audience.

Grand St. gets this -- that's why we're such a good fit.

A curated marketplace, Grand St. addresses indie hardware makers at different stages in the development cycle. Their pre-orders feature showcase products that are not yet widely available, but will be soon. Their beta feature lets makers get direct feedback from buyers on products that are still evolving. And their shop feature is for consumer-ready products that are 100% functional and currently shipping, with guaranteed customer satisfaction.

Grand St. strives to enable small designers and maker teams to find a legitimate path to market, just as Etsy's goal is to empower our sellers to start and grow their independent, creative businesses. We are so excited to continue making this progress together.

Update: Grand Street has published its own blog post on the deal. From it:

While this is a big step for us as a company, we plan to change very little about the site and your experience of Grand St. in the near term. We exist to bring you the best in indie electronics from designers and makers all over the world, and we'll continue to do that at grandst.com. We will continue to launch new features and have a few coming out soon that we think you'll love.

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