Heyday Raises $555M to Acquire & Scale D2C Amazon Brands

E-commerce Consolidation: Heyday Secures $555 Million Funding

The trend of consolidation for enhanced economies of scale is a dominant force in the e-commerce sector. Today, a significant player in online retail announced a substantial funding round to further its strategy in this area. San Francisco-based Heyday, a company focused on acquiring and scaling direct-to-consumer brands that have demonstrated initial success on the Amazon marketplace, has secured $555 million in Series C funding.

Funding Allocation and Expansion Plans

This new capital will be utilized to expand Heyday’s technology capabilities, bolster business development efforts, and acquire additional assets. The company intends to deepen its presence in Asia, establishing a seventh office in China.

Furthermore, Heyday plans to:

• Hire more brand management professionals and other skilled personnel.
• Invest in further product development initiatives.
• Expand its marketing, supply chain, data science, and M&A technology infrastructure.

Investor Details

The Raine Group and Premji Invest co-led this funding round, with participation from existing investors including General Catalyst, Victory Park Capital, and Khosla Ventures.

Competition in the Amazon Marketplace Roll-Up Space

Heyday operates within a competitive landscape, facing numerous startups also raising significant capital to pursue similar Amazon marketplace roll-up strategies. Prominent U.S. competitors include Thrasio, which raised $1 billion in October, and Perch, securing $775 million in May.

Founded in 2020, Heyday has rapidly expanded its operations. This latest funding follows a $70 million Series B round raised in May, bringing the company’s total funding to $800 million, comprised of both equity and debt.

Rapid Growth and Revenue

“Our growth rate is remarkable,” stated Sebastian Rymarz, Heyday’s co-founder and CEO. “We launched just 16 months ago and are already exceeding $200 million in annual revenue.” The company reports that its brands are experiencing a year-over-year growth rate of 64%, outpacing the broader e-commerce market.

Valuation and Long-Term Vision

Heyday has not publicly disclosed its valuation, with Rymarz indicating the latest round was completed at “a very good valuation.” He emphasized a long-term perspective, stating, “I don’t want the team focusing on valuations at this early stage.”

Industry sources estimate the valuation to be over $1 billion, though precise figures remain unclear due to the mix of equity and debt financing. Comparatively, Thrasio is valued at approximately $5 billion, Razor Group at over $1 billion, and Perch in the nine-figure range.

Heyday is also profitable on an EBITDA basis, as confirmed by Rymarz.

Targeting Third-Party Amazon Sellers

Millions of third-party sellers rely on Amazon as their primary sales channel. Heyday and similar companies capitalize on an opportunity to target merchants who may lack the resources or desire to independently scale their businesses. As marketplaces like Amazon mature, increasingly sophisticated technologies can be leveraged to enhance product visibility and compete with similar brands.

Heyday’s technology is designed to evaluate a vast number of merchants, identifying those with the greatest potential for acquisition.

The Heyday Approach to Scaling

Upon acquiring companies and their intellectual property, Heyday aims to leverage its platform for integrated marketing, sales analytics, production, distribution, and retail channel management. The company focuses on continuing product development and expanding the acquired brands’ reach.

The prevalence of third-party merchants and the challenges they face in scaling have created a ripe environment for consolidation, attracting significant competition among consolidators.

A Growing Field of Competitors

In addition to Thrasio, Razor Group, and Perch, other companies actively raising funds for similar strategies include Heroes ($200 million), Olsam ($165 million), Suma Brands ($150 million), Elevate Brands ($250 million), factory14 ($200 million), Branded, SellerX, Berlin Brands Group (X2), Benitago, Valoreo, Rainforest, and Una Brands.

Focus on Quality Over Quantity

Heyday differentiates itself by prioritizing the quality of acquired brands over sheer quantity. Currently, Heyday’s portfolio consists of only 15 brands, compared to over 200 for Thrasio and 150+ for Razor Group. Five of Heyday’s brands contribute over 70% of its total revenue.

Rymarz actively rejects the characterization of Heyday as a simple “rollup play,” emphasizing that Amazon serves as a launchpad, and Heyday is not merely an aggregator.

Expanding Beyond Amazon

While Heyday does not publicly disclose the names of its acquired brands, they operate in categories such as home and lifestyle. The company’s strategy extends beyond Amazon, aiming for placement in major brick-and-mortar retail chains like Target.

Building a Robust Team

Heyday’s acquisition strategy often does not involve retaining the original brand teams, but it has been actively recruiting experienced e-commerce professionals. Recent hires include a CFO (Navid Veiseh), a CMO (Reema Batta), and a chief administrative officer (Todd Heeter).

Investor Confidence and Future Outlook

The influx of investment into this sector reflects the significant growth in e-commerce over the past decade, particularly accelerated by the COVID-19 pandemic. Investors are seeking opportunities within this landscape, beyond the dominance of established players like Amazon.

“We have been exceptionally impressed with Sebastian and his team, their vision, and commitment to operational excellence for the next generation of consumer brands,” stated Jake Vachal, managing director at The Raine Group.

Sandesh Patnam, managing partner at Premji Invest, added, “Heyday’s differentiated strategy and world-class team stand-out in what is playing out to be one of the most explosive new industries.”