Customized jewelry is known for being notoriously expensive. Many consumers purchase jewelry that is based on mass-produced designs to avoid these high customization costs. Shoppers with limited budgets are forced to purchase a more common piece over something unique and special to them. One obvious repercussion of this is limited optionality for most consumers. But there is another, less apparent side effect: jewelry whose production can be harmful to its wearers and to the environment. The cheaper jewelry is to produce, the more likely it is to require components or include processes that are not eco-friendly.

One company that claims to have a solution to both the customization problem and the eco-friendly issue is Capsul. A woman-led startup, Capsul is dedicated to creating quality customized jewelry at a reasonable cost for its customers. On the eco-side of the equation, the business uses mostly sterling silver, brass, and gold to craft its products. Unhealthy jewelry is often produced using lead, cadmium, and/or various plastics like PVC. It is common for sterling silver to be up to 5% cadmium in composition while gold could have more. 

When it comes to customization, the business is quite interesting. Some of its products include necklaces that are crafted to show a person’s name in their own handwriting. Capsul does this using computer vision and 3D printing technologies. It also offers customizable rings, bracelets, and more. Perhaps the most intriguing of its customizable jewelry options is the Soundwave line of products. On a necklace, ring, or other product, customers can have engraved the output of a sound file. The sounds could be anything from waves crashing at the beach or to someone telling somebody else they love them. Any audio file can be uploaded to the company when placing a customized order. Additionally, consumers can scan a Soundwave engraving with the Capsul app to have the audio played back for listeners. 

Pricing for Capsul products is not always cheap. Some of their products, like earrings, start at prices closer to $15. But other products approach the $300 range. It all depends on what the customer wants, but the average order on its website is $150. What is encouraging is that only 3% of jewelry sold by Capsul is ultimately returned by its buyers. This seems to be pretty low when you consider the defects that are more likely to occur with customized jewelry. What is discouraging, though, is that just 13% of its customers return for a second order. Capsul’s current products may be viewed by consumers as a special, one-time gift, rather than a repeatable purchase. 

Complete financials have not been provided by Capsul. It did, however, report revenue for the past three fiscal years. In 2017, the company sold $33,058 worth of product. This grew to $96,105 in 2018 and surged to $385,446 last year. Management said that the COVID-19 pandemic did slow down sales considerably. But even with that slowdown the company’s revenue is so far up 20% compared to the same time seen in 2019. While the business did not provide detailed financials, they did provide a basic breakdown of expenses. If these are comprehensive, then in 2019 the firm lost $429,591. This is nearly triple the implied net loss of $153,528 seen a year earlier.

The global jewelry industry is quite large in size. According to one source we found, the space is worth about $325.5 billion today. Current forecasts call for growth of 8.1% per annum through at least 2025. At that point, the industry would be about $480.5 billion in size. A separate source, McKinsey & Company, painted a slightly different picture of the environment. They claimed that 2020 sales would be around $294.4 billion. Historical growth rate over the prior few years averaged between 5% and 6% per annum. Sticking at this midpoint and assuming that the market continues on at the same rate, the industry opportunity by 2025 should be worth around $384.8 billion.

Most jewelry sales appear to involve intermediaries, but this doesn’t fit the current business model pushed by Capsul. They have operated as a direct-to-consumer business, pretty much all of which has been done through online channels. One source we found suggested that the global online jewelry market should be worth around $26.5 billion today. The current forecast is for it to grow at a rate of 15% per annum. This will push sales up to $46.4 billion by 2024. This higher growth rate will allow online sales to grow from 8.2% of all jewelry sales today to 9.7% by the end of the 2024 forecast period.

At the top of the Capsul team is Tina Cheng, the company’s founder and CEO. Prior to starting the business, Cheng was the COO of Coordinates Collection. Before that, she worked as the CEO of the Greater China operations for Jigocity. Other prior roles include working as the Managing Director of Pacific Pearl Group and as the VP of Capital Markets at Realty Capital Partners. Another important figure at Capsul is Bonnie Say. Say’s role today is as the Production Manager for the business. Before that, she owned and operated Say Designs. A previous role was as the CAD and Production Product Manager for Joseph Jewelry. And before that, Say was the Regional and Branch Manager at Finlay Enterprises. The last noteworthy person on Capsul’s team is Jessica Suarez. Suarez is currently the company’s Customer Relations Manager. Before that, she was the Operations Assistant for Luv Aj. And her role prior to working there was as the Executive Assistant to the CEO, CD, and COO at The Glam App.

After reviewing the prospects offered by Capsul, our team has rated the company a Neutral prospect. The industry it operates in is significant in size, and the online component of it is growing rapidly. The business has found a way to distinguish itself from most other jewelry firms on the market. What’s more, management has done well to grow it at a nice clip since inception. The pre-money valuation of nearly $8.5 million is toward the high end of what you might expect, but it’s not a ridiculously high price. On the other hand, there are some problems with Capsul and its business model. For starters, what management is doing is not difficult to replicate. Any business can easily do what they are doing given the proliferation of 3D printing. It appears that Capsul is still operating at a loss. This is likely to continue for the foreseeable future as the firm prioritizes growth over all else. All of this taken together implies that it’s an interesting firm, but it’s not something truly special.