Heyday raises $555M to buy up and scale more D2C brands on the Amazon marketplace universe

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Consolidation for better economies of scale is one of the biggest themes in the world of e-commerce, and today a player in the world of online retail is announcing a massive round of funding to double down on its approach to the concept. . based in san francisco Time of joy — which buys and then grows direct-to-consumer merchants and brands that have found initial traction by leveraging Amazon Marketplace — has raised $555 million, a Series C it will use to continue expanding its technology, To invest in business development. To buy more properties. Notably, it will also deepen its engagement in Asia (with a seventh office in China); hiring more brand management experts and other talent; Investing in more product development; and building out its marketing, supply chain, data science and M&A tech stacks.

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Rhine Group and Premji Invest co-led the round, with previous backers General Catalyst, Victory Park Capital and Khosla Ventures also participating.

Heyday competes against a large field of startups and has raised large amounts of money to follow its own Amazon Marketplace roll-up strategies. Other big names outside the US include Thresio (which made $1 billion in October) and Perch ($775 million in May). Heyday has been growing rapidly since its inception in 2020. This latest round comes on the heels of a $70 million Series B that was raised only in May of this year, taking Heyday’s net worth to $800 million. , a mix of equity and debt (Heyday did not specify the ratio of equity and debt in this latest Series C).

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“Our pace is insane,” Heyday co-founder and CEO Sebastian Rymerz said in an interview. “We were born 16 months ago and are already surpassing $200 million in revenue.” (This is an annual run rate figure.) The company said its brands are currently growing at 64% year-on-year compared to the broader e-commerce market.

Heyday never disclosed its valuation, and Rymarz would only say that this latest round was built on “very good valuations.”

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The lack of details is intentional. “I don’t want the team to think or think in my head that ‘we have won,'” he continued. “We are only 16 months into what we think will be a multi-decade journey. I don’t want to celebrate valuations at this stage.

However, as a reference point, Thrasio is now valued at around $5 billion; Razer Group based out of Berlin was valued at more than $1 billion last week; And Perch is also now in the 9-figure range. Like everyone else, Heyday is profitable on an Ebitda basis, Riemerge confirmed to me.

There are millions of third-party sellers using Amazon as their primary route to market, and Heyday and others like it have seized on a prime opportunity to target them: Often, these merchants have access to their businesses to the next. Lack of capital or appetite to level up. Why increase? Also, as Amazon and other marketplaces mature, there are more sophisticated methods and more technology that can be used to help them take advantage of products to find more buyers. Finding ways to game Amazon’s algorithms, even among a pool of Me-Too brands.

The point of the heyday is that he has created a technology that evaluates this sea of ​​traders to identify the most interesting of them all. Rymarz said it may consider buying just one for every 100 traders.

When Heyday buys these companies and their intellectual property, the idea is that it reaps the rewards of doing that scaling on its own. It does so by integrating the business into a single large platform for marketing and sales analysis, production and distribution, and managing retail channels; And by following the company’s initial trajectory to continue to develop more products to move forward in that journey.

Given the number of third-party traders and the gating factors for their expansion, it has become a ripe area for consolidation, and therefore, unsurprisingly, it has also become a ripe area for competition among consolidators.

In addition to Thrasio, Razer Group and Perch, others that have recently raised both equity and debt for similar purposes include Heroes, which raised $200 million in August; Olsam with $165 million; Suma Brands ($150 million); Elevate Brands ($250 million); Factory14 ($200 million); Also Branded, SellerX, Berlin Brands Group (X2), Benitago, Valorio in Latin America and Rainforest and Una Brands are based out of Asia. There are dozens more.

How Heyday differs from these others is that, at least so far, it has focused on quality, not quantity, of merchants.

Rymarz said Heyday currently only has 15 brands, compared to 200+ for Thresio and 150+ for Razer Group. Then again, it’s also intentional: “We have very large brands, five of which make up more than 70% of our revenue.”

When Heyday is described as a roleup play, he oozes positive. “Amazon is a launchpad, and we are not an aggregator,” he said.

For competitive reasons, Heyday has never publicly disclosed the names of the brands it owns, but they do have products in categories such as home and lifestyle. And the bigger strategy isn’t just to build your profile on Amazon, but to expand to a number of other channels, including placements in household-name brick and mortar chains. (Rymarz showed me several brands under the condition that I wouldn’t publish their names, but just so I could get a better idea of ​​what they owned. At least two of them to sell in stores like Target Gearing up.)

Heyday’s pitch these days typically doesn’t bring any team associated with the brand it buys (there are sometimes exceptions, Raimerz said), but it does bring more people on the team with extensive e-commerce experience. is bringing. To build up your comprehensive operations. In addition to hiring more branding and retailing teams, it has brought in a number of new executives, including a CFO (Naveed Weeseh, previously at Amazon and Coupang); A CMO (Reema Batta, formerly of Opendoor and Expedia), and a Chief Administrative Officer (Todd Heiter, formerly of Doma and Enixter).

It is interesting to see how many investors have taken advantage of this opportunity over the years. (Other big names that are backing Amazon Marketplace consolidators include SoftBank, BlackRock, Silver Lake, Target Global, Tiger Global, and more.) Part of the appeal is that it’s offering investors some big e-commerce developments. Lets take a look at what we’ve seen over the past decade, in a landscape that has otherwise been dominated not by startups, but by big players like Amazon. This, of course, has become an even more acute opportunity in the last two years with the rise of COVID-19 and we have seen more people shopping online than ever before.

“We are exceptionally impressed by Sebastian and his team, their vision and commitment to operational excellence for the next generation of consumer brands,” Jake Wachal, MD, The Rhine Group, said in a statement. “Heyday’s innovative approach to developing and incubating brands gives entrepreneurs access to cutting-edge technology, as well as deep roots in operations and marketing. We are excited to partner with this team as they continue to build a differentiated platform for quality, digital-first brands. ,

Investors in this round said Heyday’s special attitude was also a factor.

“Heyday’s differentiated strategy and world-class team is one of the most explosive new industries,” Sandesh Patnam, Managing Partner, Premji Invest, said in a statement. “We are excited to partner with the leadership team to help us make a mark on the e-commerce space.”

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