Tiny Earth Toys bulks up funding, operations ahead of holiday shopping season

North Carolina startup Tiny Earth Toys has added another $1.6 million to its coffers — just in time for holiday shopping. It’s the second outside capital raise for founder Rachael Classi, who closed on $1.5 million to roll out the concept in 2021.

The toy company is about to get a big test — the biggest shopping season of the year.

In some ways, the flex space it’s operating out of at the Launch Pad in Raleigh is like Santa’s workshop. The 14-person company, which offers a toy subscription service, is busily working to prepare for holiday gifting — and it’s doing so against a constantly ticking clock as demand keeps increasing.

Classi said that, in recent weeks, there’s been a “really big surge” in memberships as parents look for low-clutter ways to fill their kid’s toy chests.

“We think what’s happening is, families are trying to get ahead of the holiday rush,” she said.

They’re trying to get out ahead of supply-chain issues and toy outages. But in the case of Tiny Earth Toys’ customers, they’re also trying to avoid the glut of stuff — the plastic toys with tiny pieces you step on long after the ornaments have been put away.

Classi, a mom of two, quit a successful career at Teamworks in Durham during the pandemic so she could hunker down with her family. Becoming a stay-at-home mom made her realize how many plastic toys were cluttering up her home, so she started her own business.

Tiny Earth Toys offers age-appropriate, sustainable toys that families return to receive the next box. The company has two missions — to entertain children with enriching toys and to help families cut down on waste. Instead of piling up in the corner of a kid’s playroom — eventually finding its way into a landfill — the toys are sent back. With a membership, kids get a new set of toys every other month.

Just two years since its inception, the concept is a hit investors are banking on, funneling more dollars into the concept. The latest funding round closed in October.

Tiny Earth Toys is bulking up with that capital. The firm is planning to hire additional workers, particularly in engineering. It recently moved to the Loading Dock and is eyeing other flex warehouse space in the market, as it will likely outgrow its current space if it keeps up this blistering pace.

In addition to growth, it’s also fueling philanthropy. Tiny Earth Toys plans to select 10 families to receive a year's worth of toys for free through the company's rental membership.