North Coast Ventures recently co-led a $10M Series A investment in Society Brands, a technology and operational platform that acquires ecommerce consumer products companies that primarily sell on Amazon and their own direct-to-consumer (DTC) sites.
This area of ecommerce is large and fragmented with more than 2.5M third-party vendors on Amazon Marketplace for which Amazon hosts the ecommerce business operations, such as logistics, warehousing, delivery, customer service and potential returns. Because many of these independent entrepreneurs are relatively small-scale, they often lack resources to drive meaningful growth or achieve liquidity. This landscape gave rise to the Amazon aggregator wave of the past several years.
The first wave has seen both success and some missteps. Many aggregators took a pure financial rollup approach, without adding much value to the underlying businesses they acquired. These aggregators paid elevated valuation multiples by acquiring small-scale sellers during the COVID valuation bump - a much higher multiple than the current valuation range.
We are enthusiastic about the timing and differentiated approach that Society Brands brings to this space. Unlike most other aggregators, Society Brands encourages entrepreneurs to stay with their brand and take part of the consideration in the form of equity in Society. Their unique “founder-friendly” model includes founders in the go-forward operations of the individual brands. This allows entrepreneurs to receive liquidity upfront as well as the opportunity to stay onboard while the business grows.
One of the reasons this approach is attractive to FBA and ecommerce native sellers is that the Society team has a compelling track record, bringing a true “product” perspective and expertise to the space. The instant boost of becoming part of the Society team allows brands to optimize marketing tactics, drive efficiencies in supply chains, and expand reach to other ecommerce platforms. By curating an ecosystem with like-minded entrepreneurs and a rich pool of industry-leading resources, Society is able to take their brands to the next level.
The team at Society Brands is compelling. Co-founded by brothers Michael and Justin Sirpilla, who serve as the CEO and President respectively, Society has assembled a leadership team that has sold over $2B on ecommerce platforms and performed multiple M&A roll ups. With deep omnichannel experience across marketplaces, such as Walmart, Target and Shopify, the Society team has extensive experience with deal sourcing, operations, logistics, technology and the Amazon seller market.
Society Brands secured a $200M credit facility to fuel acquisitions and is poised for rapid growth. NCV is excited to back the Society team as they seek to become a premier player in the ecommerce space and the partner of choice for the strongest ecommerce brands.
The investment comes from North Coast Ventures Acceleration II Fund. This fund targets high-growth, B2B, SaaS companies that have demonstrated meaningful commercial traction and have articulated a credible plan to utilize larger amounts of capital for continued growth.
About North Coast Ventures
North Coast Ventures (NCV) is a Cleveland-based early-stage venture capital firm primarily investing in B2B, SaaS companies. With over 400 member investors, NCV is the largest, single-chapter investor group in the country. Since 2006, NCV and its member investors have deployed more than $90M into 67 high-potential ventures.
For more information about North Coast Ventures and its portfolio, visit northcoast.vc.