May 28, 2022

Moonshot Brands today announced the acquisition of $30 million in capital and a $150 million line of credit to be used to purchase assets from other e-commerce aggregators. Co-founder CJ Isaco said this is just the start of what he believes will be further consolidation in the busy industry.

“Last year there were a lot of funding announcements and people were buying at the peak of COVID prices, but now aggregators are starting to fail and we are buying assets from some of them,” Isako told gaming-updates.

The equity stake was led by Anthemis and included existing investors YC Continuity and Garage Capital. The loan was provided by Victory Park Capital. Isaco said it is currently providing more than $200 million in total funding to the company.

He views Moonshot Brands, which you can learn more about in this in-depth look at aggregators, as a boutique company focused on Amazon and direct-to-consumer brands around the world, originally with mobility and in the action sports sector.

However, Isako doesn’t really care about the nickname “Aggregator”. When he and co-founder Alan Fish returned to work in 2020, they saw similar companies like Thracio leverage leverage to buy and acquire multiple brands. Instead, Isako and Fish wanted to connect with entrepreneurs who would join Moonshot and run their own brands.

“We want to get them off Amazon and not just buy Ebitda, but build a long-term brand,” Isako said.

The assets purchased by Moonshot were owned by Product Labs and included the scooter brand La Scouta and the fitness brand WOD Nation. Moonshot has nine brands including Magneto Boards and is currently set to grow to over $100M by the end of 2022 in a sluggish 12-month growth.

Before you start thinking Product Labs is failing, Brad Moss, the co-founder of the company, told gaming-updates that the tech services company, which was founded two years ago, was the one that pulled the curtain down with multiple aggregators like Thresio. . and 101 Commerce for providing software, data, and other tools to build your brand.

When Product Labs raised outside funding, it created a holding company that bought several brands. When the investment group decided to sell the assets, those brands, including La Scuta and WOD Nation, were sold, Moss said. Now he manages part of the business and has merged it with another company called Brandless.

E-commerce aggregators around the world are still doing well and are attracting venture capital. New Vessel, Una Brands and Nebula Brands, for example, have raised new funds in Asia in the past six months, as have Merama and Quinio in Latin America.

In recent years, however, industry congestion has led to eventual consolidation, which Taliesin says Hollywood is starting to happen.

Hanbeck’s director handles e-commerce M&A and oversees the aggregator market. As evidence, he cited recent deals in which Olsam acquired Flywheel Commerce and Berlin Brands Group acquired Orange Brands. He pointed to a deal with Thracio in early 2020 when he took over Thirsty, which Hollywood said was “an effective way for Thracio to enter the German market.”

“However, most aggregators don’t have pressing issues,” he said. “Overall, their portfolios do well on average, and most of their acquisitions have one thing in common – net margins above 20%. Even those that remain will return to the market in a few months, when sellers’ expectations fall again.

Hollywood confirmed Isaacco’s words about buying at the peak of the market as one of the drivers of change in the industry.

Currently, he notes that aggregators are bidding furiously for the most attractive properties, which represent a small minority of these companies, and offer little for the rest. On the sales side, they noted that they expect higher ratings than ever before.

“They’ve heard some sellers reaching out to aggregators, and “we’ll only talk to you if you can guarantee us 5.5 times the seller’s discretionary income before starting discussions,” Hollywood said.

“Aggregators need to lower their average acquisition multiples — they wanted to do this last year — but we have a strong feeling they need to do it now,” he said. “Many aggregators solve this problem by completely stopping the acquisition. Others become more cautious or focus heavily on certain categories. Meanwhile, their marketing and closing departments are still actively negotiating with sellers, giving them the impression that the market is still extremely dynamic. It will take a few months for everything to return to normal.”

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