Many of the e-commerce roll-up companies, also known as aggregators, slowed down this year after a record 2021. However, some younger companies in this space are still thriving.
One of these is OpenStore, a company founded in 2021 as a way for Shopify entrepreneurs looking to move on to sell their businesses in a matter of days with a cash offer and less stressful experience. Over the past 18 months, OpenStore acquired dozens of businesses representing tens of millions in revenue.
The early success of the company may lie in the makeup of its founders: OpenStore is led by some heavy hitters, including Founders Fund general partner Keith Rabois and Jack Abraham, Atomic’s founder and managing partner, who started the company along with Matt Lanter and Jeremy Wood.
“We’ve been disciplined, applying the same principles that I have been doing for the past 23 years,” Rabois told TechCrunch.
While aggregators this year have announced layoffs and even wound down their acquisition divisions, OpenStore “grew substantially, increasing the number of brands and tripling the size of the team,” Rabois said. The company now has more than 100 employees.
In addition, while funding to aggregators has slowed to a comparative trickle — $9 billion of funding went into aggregators by September 2021, compared with $2 billion over the same period in 2022, per the Financial Times — the Miami-based company is among the recipients of some of those recent investment dollars. To wit, OpenStore just closed on $32 million in a round led by Lux Capital that values it at $970 million. The company said this is a 25% increase in the company’s valuation from its previous round of $75 million in funding announced in November 2021.
The new round brings OpenStore’s total equity funding to over $150 million from investors that include Atomic, Founders Fund, General Catalyst and Khosla Ventures.
“The round was preempted,” Rabois said. “We have a fair amount of capital on the balance sheet and were looking to raise next year, but Lux reached out to me. I respect them and their strategy and was receptive to working with them.”
OpenStore’s acquisition “sweet spot” is U.S.-based, direct-to-consumer brands that have between $1 million and $10 million gross merchandise volume, Rabois said.
Josh Wolfe, Lux Capital’s founder and managing director, said via email that the firm “believes OpenStore’s model is the future of online retail,” and that its “focus on accelerating the path to liquidity for Shopify merchants means that OpenStore is especially relevant and valuable in challenging economic times.”
The company is also ramping up its acquisition pace and will use some of that new equity to continue growing the team and acquire brands, he said. Brand acquisitions include apparel brands Jack Archer, Barn Chic Boutique, Yogaste and Wearva.
OpenStore’s longer-term goal, according to the company, is to “bring the experience of spontaneous discovery back online” in a new way of shopping that connects merchants with customers via one shopping experience driven by data, …read more