July 22, 2022
You’ve grown your Amazon brand, it’s bringing in significant revenue, but you’re wondering, “what next?”
Should you raise funding or sell the business?
Venture funding is tough, and you can’t seem to find a credible buyer to pay your business’s worth.
In an interview with Thrasio’s VP of Acquisitions, Ken Kubec, FourWeekMBA said:
"Amazon sellers, in most cases, would hit the ceiling with their businesses when approaching the $3-5 million revenues. In order for them to grow, it requires capital, usually coming from loans or personal.”
Thrasio offers businesses facing scaling challenges and merchants seeking exit opportunities with seamless exit options.
When Thrasio acquires a brand, it deploys its resources to consolidate and grow it into a thriving household name. So, keeping the founder’s legacy and, at times, sharing profits post-purchase.
This review will explore everything you need to know about Thrasio and how to exit with it.
Thrasio is an exit company that targets Fulfillment by Amazon (FBA) businesses.
Carlos Cashman and Joshua Silberstein founded the company in 2018 to offer six-digit Amazon sellers a profitable and seamless exit from their FBA businesses.
Thrasio works with successful sellers to make the world's most-loved products accessible. "Our goal is to provide people everywhere with what they need to make the most of every moment—ensuring that what gets delivered to their door delivers."
The Amazon aggregator uses a deep understanding of ranking, rating, and reviews, plus a supply chain to identify quality brands to acquire.
Furthermore, it leverages data science and world-class expertise to scale the products.
Thrasio has acquired nearly 200 top-selling brands, managing about 14,000 products—impressive numbers for a less than five-year-old company.
Thrasio has been profitable since inception, doubling revenue every 73 days on average.
It reported a $100 million profit on a $500-million revenue within two years of launch, making it perhaps the fastest-growing FBA business acquisition brand.
The company’s current valuation probably stands at $6 billion.
The Amazon aggregator attracted $3.5 billion in five funding rounds between April 2020 to the same month of the following year.
Thrasio raised $100 million in the first funding round. It got an additional $260 million injection three months later in a Series C financing, making it the fastest profitable brand to reach unicorn status.
In January 2021, Thrasio received a $500 million debt facility to increase its balance sheet without diluting ownership. Joshua Silberstein, Thrasio's CEO, believes the debt financing will increase the company's value to stakeholders.
Additionally, Thrasio raised $750 million and $100 million during the fourth and fifth funding rounds in February and April 2021.
A deeper look at Thrasio's funding shows it raised $2.5 billion in just the first four months of 2021 when most businesses were packing up due to the pandemic. Data also revealed that the company received nearly 50% of all Amazon aggregator funding in 2021.
It’s even possible the numbers aren’t telling the true story. According to Marketplace Pulse, “Some firms haven’t yet disclosed their funding, so the total capital raised is even greater.”
Thrasio closed an all-equity Series D of over $1 billion in a fresh funding round, putting its valuation to $10 billion. Advent and several other previous backers were all in the round, signaling their increasing confidence in the company.
Thrasio has evolved to become more than an Amazon business acquirer.
The company’s strategic acquisition has seen it grow into a next-generation global consumer goods brand, expanding its wholesale reach. The acquisitions also enabled it to expand its market reach and grow operations.
According to Carlos Cashman, Thrasio’s co-founder, “Our business is getting better as it gets bigger, and these investments will be invaluable as we continue on that path.”
Some of its recent acquisitions are Lifelong Online, a home appliance brand; Wise Owl Outfitters, an outdoor products and gear company; SafeRest, a brand specializing in innovative mattress and pillow protectors for healthier sleep.
The other acquired companies are Yardline and Bonstato.
Thrasio offers Amazon sellers lucrative exits in a few easy steps.
FBA business owners seeking to sell can contact the company via their website to open negotiations, and Thrasio will respond within 24 hours.
Next, the Amazon aggregator works closely with the seller to determine if the business is a good fit. If it pans out green, the company will initiate the exit process. Furthermore, the team works with the seller to arrive at an acceptable deal.
It’s that simple.
Thrasio has expanded into the U.K., Germany, China, and Japan. In addition, it made its first acquisition in India to extend its operations in one of the world's fastest-growing eCommerce markets.
It aims to provide people with what they need to make the most of every moment.
So, the company has been buying 1.5 businesses per week. Then, it adopts a five-step process to transform them into household names.
The company begins by deep diving into the brand’s potential to evaluate what’s possible. Then, it enters into relationships with sellers, offering them long-term earnouts if the business has exponential growth potential.
Next, Thrasio applies its proven process to develop an actionable plan to boost business growth. They put the brand through a rigorous 500+ checkpoint process, analyzing the supply chain, marketing, compliance, and everything to position the business for success.
With the plan in hand, the company put the wizards to work. Their eCommerce experts leverage their experience improving tens of thousands of products to transform the brand into a household name.
Additionally, Thrasio optimizes the brand on the marketplace, using its experience as a top-five seller to help it win on Amazon.
It works with relevant stakeholders to turn the businesses into a "5-star force," allowing them to reach more people with Best Seller Badges and Amazon's Choice Rankings.
Finally, the aggregator explores other distribution channels to go beyond Amazon. It strives to put the products in retail stores and global marketing, helping them shine as consumer brands.
People are not often fascinated about selling their business.
It's even more challenging if they grew it from the dust into a six- or seven-figure hitter, so approaching them with a contract could be a huge ask.
According to the BBC, “There’s something about the thrill of building brands online that makes it hard for entrepreneurs to step away.”
But Thrasio has seen success rolling up top-selling Amazon FBA businesses and consolidating them under one roof. It’s now more than halfway near a two-digit billion-dollar valuation in less than five years, with over 200 brands under its belt.
Why are these merchants selling to Thrasio instead of scaling them?
It’s obvious; let’s get to them.
Running an Amazon FBA business at scale often becomes more challenging as it grows.
It could require substantial inventory and product development investment to meet the growing demand and ever-changing customer expectations. The business might also need more capital to hire a larger workforce to handle the new responsibilities.
Additionally, the daily grind of managing the team to keep them productive, dealing with suppliers, and overseeing sales promotions, among others, can wear down any seller.
Thrasio offers sellers a seamless exit to relieve them of the burden of these new expectations. It can wrap up the process within 30 to 40 days to give the seller a clean break from their business.
Thrasio offers sellers a huge cash payout to reward their hard work.
The company pays sellers between 2.5 to 4.5 times their business earnings, meaning those hitting $1 million in annual sales might get a $2.5 million cash payout.
Thrasio pays more if the business makes substantial annual sales, has a patent, trademark, or signed an exclusive contract with manufacturers. It could also offer more to brands with top-ranking products on high-volume keywords.
Having over 500 customer reviews and a 4.0-star rating could also be advantageous.
Thrasio said organic reviews give social proof that the product is a leader in the category. It also believes that over four stars prove the product's quality.
Sellers also have a life to aspire to beyond Amazon and want to live it.
They probably have social causes that interest them, places they’d love to visit, or other activities they enjoy, but their growing business demands extended hours, denying them this passion.
So selling to an aggregator lets them pursue other interests.
David Stephen is the founder of Davaon, a garden tool brand selling more than $2 million per year. He said, “It got to the point where we were looking at 12 to 15 hours a day. I was doing the weekends, it was non-stop.”
“I was dealing with the stock coming in, we were packing the boxes ourselves, sending them to Amazon. There was never really a break.”
David sold the business to an aggregator. He plans to start a new venture soon.
Thrasio’s consulting agreement is one of the perks of selling to the company.
Staying with a business that recently went through a quick acquisition is often challenging. Thrasio is usually willing to allow sellers to stay with them on a consulting basis to help whenever problems arise.
The contract allows them to continue being a part of the business’ growth.
And the compensation could be rewarding too. Sellers could also earn additional income through stabilization and earnout payments.
They receive stabilization payment when the business maintains its pre-acquisition level for 12 months. Conversely, only sellers whose brands grew under Thrasio's portfolio receive an earnout.
The aggregator claims to be the only company offering earnouts. According to them, "Other buyers can't offer earnouts because they don't have the proven record of success that our operations team has proven time and time again."
The company said it paid performance earnout to 94 percent of sellers’ acquired businesses —clear evidence of its Amazon expertise.
Entrepreneurs don’t wish to see their brands disappear into oblivion when they sell them.
Of course, they want them to do well, even when they're no longer gaining from it. So Amazon sellers get this joy when Thrasio buys their brand.
The company optimizes and operates the brands, leveraging best-in-class marketing, product development, and supply chain management to drive staggering organic growth, growing them into A-Players in their respective markets.
Thrasio estimated that one-in-six U.S. households had purchased their products—over 20 million U.S. families—another impressive number for a young consumer goods company.
Also, 86 percent of Thrasio products sell internationally, indicating the extent their marketing and operations can take any brand.
According to Ben Tong, the founder of Otis, an Amazon FBA business, “Thrasio was able to consistently keep revenue strong through 2020 despite the numerous manufacturing, logistics, fulfillment constraints so many sellers faced during COVID.”
“I don’t doubt they handled the account better than I could have myself, given the same challenges,“ he concluded.
The review validates what the Amazon aggregator offers the brands it acquires.
Thrasio aims to build a brand that offers consumers more choices and can compete with household names to provide exceptional value. So the company creates various ways for talented people to partner with them.
As a result, it's open to exploring these commercial opportunities.
Thrasio aims to expand its sales channel beyond Amazon.
So the company’s retail team can work with large national retail chains and other volume distribution networks both domestically and abroad to explore new markets and customer touchpoints to make their products more accessible.
Thrasio is open to new marketing ideas.
It can partner with top eCommerce experts, SaaS platforms, and influencers who share the vision of helping entrepreneurs and eCommerce businesses grow and have what it takes to rejig their marketing and broaden the company's reach.
The corporate development team seeks investment opportunities across the globe to continue scaling its operations. It's interested in merger and acquisition opportunities, including joint ventures and a minority investment in eCommerce software companies.
Thrasio is open to exploring strategic partnerships with anyone that can help drive competitive advantage and differentiation within and beyond its core businesses.
eCommerce aggregators organize multiple products from different companies and sell under a common brand name. They acquire top-selling Amazon FBA businesses and consolidate them.
Thrasio is looking for well-reviewed, highly-rated, and category-leading products hitting at least six-figure sales annually. They acquire brands with incredible growth potential and upscale them to succeed in Amazon, DTC markets, and beyond.
Thrasio acquires only solid businesses with decent profit margins.
They overhaul the entire business, bringing in their expertise to develop and implement a long-term revenue growth plan. Additionally, the company expands the sales channel beyond Amazon to reach more audiences.
Thrasio pays sellers between 2.5 to 4.5-times on business earnings. It has paid over $150 million to sellers so far.
Thrasio’s acquisition process lets sellers exit their business within a few weeks. Interested Amazon FBA business owners can get started by completing the form on their website.
The company replies within five business days with a letter of intent if the FBA brand fits its model. If otherwise, Thrasio refers them to one of their brokers to help them sell.
The aggregator carries out due diligence in the next five to 25 days. It also reconstructs sellers' profits and losses within the timeline to ensure the closing goes off without a hitch.
Thrasio usually completes the legal procedures between days 25 to 35. Finally, it closes the deal and funds the seller on or before the 45th day.
Nonetheless, the company can complete the acquisition in fewer days. It claimed to have completed a takeover within seven days.
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