February 13, 2006 12:00 PM

Two months before her due date, Jennifer Garner admitted she had yet to nest. Whether she was busy chasing bad guys on Alias or just put off by the task of creating a room for a small person she hadn’t yet met, she blurted out on Martha Stewart’s talk show, “I haven’t done anything at all!”

But inspiration struck soon after, as Garner browsed through a catalog from Serena & Lily, a nursery linens company that just two months earlier had sold $3,200 worth of crib accessories and fabrics to Britney Spears and Kevin Federline.

Impressed with the line’s simplicity, Garner dispatched her interior designer to work with its creators, Serena Dugan and Lily Kanter. Their mission: “a space chic and comfortable and not overly babyish but still sweet,” says Dugan, 32. The room, finished three weeks before Violet, Garner’s daughter with Ben Affleck, was born, was earth-toned, soft and neutral. “They made the nursery feel comfortable, warm and welcoming,” says a relieved Garner. “Serena & Lily’s collections were classic and the cutest I had ever seen.”

Garner isn’t the only new mom praising the company, itself just in its infancy. Launched in May 2004, Serena & Lily quickly attracted high—end customers by eschewing clichéd themes like bunnies and duckies and bears, oh my. Instead they offered calm color schemes and patterns—dainty flowers, stripes and circles—that need not clash with a home’s pre-baby decor.

In just over a year their linens and accessories line, ranging from $65 for a changing pad to $969 for a hand-embroidered crib set, have popped up in more than 250 stores throughout North America, bringing in over $1 million in sales. (Custom-design services start at $500.) Why the rush on the teeny-tiny ticking? “There’s nothing else like it out there for babies,” says Dugan.

When the pair met in October 2003, “there was a real void in the industry,” says Kanter, 41, now a mother of three with husband Marc Sarosi, a gem dealer. (She admits she was forced to go the safari animal route with her oldest child.) In 2000 Kanter left her job as a top-level executive at Microsoft with several million dollars in stock and followed her bliss by starting Social Venture Partners Bay Area, a philanthropic foundation that provides grants to nonprofit groups. She also opened a children’s furnishing store in Mill Valley, Calif., an upscale suburb of San Francisco.

Dugan, then a painter and freelance designer for Pottery Barn Kids, walked into Kanter’s shop to rustle up business for her own line. Kanter was off that day, giving birth to baby No. 2—but the store manager was impressed enough to call Kanter at the hospital.

During a meeting the next day (“It was my second baby, so I felt fine,” says Kanter) the store owner was won over. “What she showed me could bring high style into the nursery,” says Kanter. They drew up a partnership, with Dugan overseeing the designs and Kanter running the business. Along with her MBA training, Kanter brought her philanthropic mandate to the table: The company donates 5 percent of sales to kid-related charities in California, New York and Mexico, including a prenatal care program for homeless moms-to-be. ” Knowing that did play a role in my decision to outfit the nursery with their linens,” says Garner. “Companies that think beyond the bottom line really resonate with me.”

In addition to its star clientele, Serena & Lily has also wowed tastemakers such as clothing designer Monique Lhuillier, who bought two bedsheets and a crib bumper for her newborn Jack. “That order was the pinnacle,” says Dugan, who began her design career by whimsically painting flea market furniture finds. “That she loved our work was totally affirming.”

Next steps for the duo: adding furniture and coordinating paints to the collection. A sign in their Sausalito, Calif., offices reads, “Serena & Lily: World Domination!” They’re kidding. A little. ” We excitedly developed the product we wanted,” says Dugan, “and in the process realized we shared a deeper desire to affect the world with more than a product.”

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