Target has finalized an investment in Casper Sleep, pumping $75 million into the fast-growing mattress startup in a funding round that will total $100 million or more, according to a source familiar with the deal.
Existing Casper investors like Lerer Hippeau Ventures, IVP and NEA are also participating in the round. New investors, in addition to Target, could send the round over $100 million.
The investment comes after Target and Casper could not come to terms on an outright acquisition after Target offered to buy the startup for $1 billion.
“Target invested in Casper because we believe in their team, their ideas and their vision for reimagining sleep,” a Target spokesman said in a statement, but declined to confirm the amount invested.
The statement continued: “The strategic partnership offers Casper access to an established retail brand and gives Target an opportunity to work with a future-focused digital brand that is exploring an area that is meaningful for our guests — sleep and wellness. We’re looking forward to exploring the future together.”
Casper, which is known for its foam mattresses that it ships to customers folded up in a box, last raised $55 million at a valuation of around $500 million in the summer of 2015. The startup received a higher valuation with this new investment, though the exact terms could not be learned.
For Target, the investment signals a move to put its money where its mouth is in its attempt to reclaim some of the cool factor that made it a hit among discount retailers for so long through relationships with popular designers and brands.
Target is launching more than a dozen of its own brands over the next two years in categories like Home and Kids to appeal to young families.
It’s also partnering with digital-first product makers like Casper — most recently — as well as Bevel, Harry’s and Who What Wear to sell their goods with the hope of driving younger shoppers onto its website and into its stores.
For Casper, the new money gives it the funds to continue to expand into new products and invest in marketing as it tries to become known for more than just mattresses and break away from a pack of competitors like Leesa and Tuft & Needle, which have raised little to no venture capital but are still growing. Industry insiders also expect more traditional mattress companies to enter the “bed in a box” market in the coming year.
While people close to Casper believe the company has its sights on an eventual IPO, it’s unclear whether having Target as an investor would scare off other potential suitors from the retail world along the way.
This article originally appeared on Recode.net.