Commerce

SellerX acquires US e-commerce roll-up rival Elevate Brands in an all-share deal, raises $64M+

Comment

Image Credits: Patrick Foto / Getty Images

E-commerce aggregators have collectively raised hundreds of millions of dollars over the last several years to push ahead on strategies to consolidate a number of smaller online retailers. Now, the aggregators themselves are the ones getting swallowed up.

Today, SellerX, a Berlin-based roll-up play that has raised nearly $900 million in equity and debt and is valued at more than $1 billion, announced that it would acquire Elevate Brands, based out of Austin and NYC. Elevate, like SellerX, is in the business of buying up smaller retailers that sell over marketplaces like Amazon with the aim of getting more economies of scale around marketing, manufacturing, and supply chain management. Elevate, on just the amount of capital that has been pumped into it, is around a quarter of the size, with some $250 million raised to date.

The companies are not disclosing the value of the deal but note that it’s an all-share transaction, and it will also include a new investment of €60 million+ ($64 million) in the combined entity from existing SellerX investors Sofina as the lead, plus L Catterton, Cherry Ventures, Felix Capital, 83North, Upper90 and TRCM Fund also participating. The merged business will also be getting an extended credit line from BlackRock and Victory Park Capital funds to buy up more companies — presumably not just individual retailers but other aggregators as well.

It also declined to disclose its new valuation when asked.

The merged company will be called SellerX Group, led by SellerX’s current co-CEOs and co-founders Philipp Triebel and Malte Horeyseck (Elevate’s co-founders Ryan Gnesin, Jeremy Bell, Robert Bell respectively as president, head of M&A and global business development head.

It will have 80 Amazon-native brands and annual sales of €400 million ($426 million). The deal is expected to close by the end of next month (June).

Roll-up plays have a tendency to start all looking like each other — there are only so many variations on “economies of scale for Amazon merchants”.

But for a few years, pre-2022, the idea of businesses raising money to pursue Amazon-like economies of scale looked smart and bankable — there are tens of thousands of individual retailers selling across big online marketplaces, and it seems like a no-brainer that this fragmented space would need consolidation and exit options for those retailers. Thus, for a while it looked like anyone building an e-commerce aggregator startup could pick up $50 or $200 million to pursue the model.

But the funding landscape has gotten significantly more constricted in the last 18 months, and many investors have become jumpy pouring large sums of money into startups that have not been able to turn a profit. So it only felt like a matter of time before the consolidators themselves — these aggregators — would start to get consolidated, too.

Now, that is what’s happening, and in a somewhat ironic twist, it has not taken long for these consolidations to follow a pattern, too. It was only a month ago that Razor Group, another aggregator based out of Berlin, also acquired another roll-up business, Stryze, and closed off a big fundraise at a $1.2 billion valuation.

“The natural route is consolidation, that is the path forward. We’re building a stronger company by joining forces. That is what you have seen and will see, and what we have executed,” Razor’s CEO and co-founder Tushar Ahluwalia told me at the time. “Plus M&A is very close to the DNA of this space.”

One point of differentiation among aggregators has been that some are aiming to build the technology stack that they are using both to source retailers to acquire, and to then run them more efficiently as combined businesses; and some are sourcing third-party software for these purposes, focusing instead on bringing management smarts into merging and running multiple e-commerce operations under one roof.

It sounds like SellerX placed itself in the former category, while Elevate identified with the latter more.

The new business will use SellerX’s technology platform, supply chain infrastructure and “proprietary warehouse operations,” and “internationalization capabilities” the company said, while “Elevate Brands will contribute its strong expertise in turning marketplace-native products into consumer brands sold across multiple channels.”

“Elevate Brands and SellerX are a perfect match: a strong cultural fit, a shared vision, and complementary capabilities,” Triebel said in a statement. “This acquisition combines our know-how and diversified portfolios of strong brands with a market-leading technology platform and strong operational infrastructure. By leveraging our combined strengths, I am convinced we are well-positioned to drive further consolidation in the industry.”

Whether that becomes a powerful enough formula to keep the merged company independent will be something to watch. Razor Group has said that it will be buying more businesses over time; Thrasio — one of the bigger players in the space — recently raised funding and is operating under a new CEO, making it another one to watch.

More TechCrunch

To give AI-focused women academics and others their well-deserved — and overdue — time in the spotlight, TechCrunch has been publishing a series of interviews focused on remarkable women who’ve contributed to…

Women in AI: Rep. Dar’shun Kendrick wants to pass more AI legislation

We took the pulse of emerging fund managers about what it’s been like for them during these post-ZERP, venture-capital-winter years.

A reckoning is coming for emerging venture funds, and that, VCs say, is a good thing

It’s been a busy weekend for union organizing efforts at U.S. Apple stores, with the union at one store voting to authorize a strike, while workers at another store voted…

Workers at a Maryland Apple store authorize strike

Alora Baby is not just aiming to manufacture baby cribs in an environmentally friendly way but is attempting to overhaul the whole lifecycle of a product

Alora Baby aims to push baby gear away from the ‘landfill economy’

Bumble founder and executive chair Whitney Wolfe Herd raised eyebrows this week with her comments about how AI might change the dating experience. During an onstage interview, Bloomberg’s Emily Chang…

Go on, let bots date other bots

Welcome to Week in Review: TechCrunch’s newsletter recapping the week’s biggest news. This week Apple unveiled new iPad models at its Let Loose event, including a new 13-inch display for…

Why Apple’s ‘Crush’ ad is so misguided

The U.K. Safety Institute, the U.K.’s recently established AI safety body, has released a toolset designed to “strengthen AI safety” by making it easier for industry, research organizations and academia…

U.K. agency releases tools to test AI model safety

AI startup Runway’s second annual AI Film Festival showcased movies that incorporated AI tech in some fashion, from backgrounds to animations.

At the AI Film Festival, humanity triumphed over tech

Rachel Coldicutt is the founder of Careful Industries, which researches the social impact technology has on society.

Women in AI: Rachel Coldicutt researches how technology impacts society

SAP Chief Sustainability Officer Sophia Mendelsohn wants to incentivize companies to be green because it’s profitable, not just because it’s right.

SAP’s chief sustainability officer isn’t interested in getting your company to do the right thing

Here’s what one insider said happened in the days leading up to the layoffs.

Tesla’s profitable Supercharger network is in limbo after Musk axed the entire team

StrictlyVC events deliver exclusive insider content from the Silicon Valley & Global VC scene while creating meaningful connections over cocktails and canapés with leading investors, entrepreneurs and executives. And TechCrunch…

Meesho, a leading e-commerce startup in India, has secured $275 million in a new funding round.

Meesho, an Indian social commerce platform with 150M transacting users, raises $275M

Some Indian government websites have allowed scammers to plant advertisements capable of redirecting visitors to online betting platforms. TechCrunch discovered around four dozen “gov.in” website links associated with Indian states,…

Scammers found planting online betting ads on Indian government websites

Around 550 employees across autonomous vehicle company Motional have been laid off, according to information taken from WARN notice filings and sources at the company.  Earlier this week, TechCrunch reported…

Motional cut about 550 employees, around 40%, in recent restructuring, sources say

The company is describing the event as “a chance to demo some ChatGPT and GPT-4 updates.”

OpenAI’s ChatGPT announcement: What we know so far

The deck included some redacted numbers, but there was still enough data to get a good picture.

Pitch Deck Teardown: Cloudsmith’s $15M Series A deck

Unlike ChatGPT, Claude did not become a new App Store hit.

Anthropic’s Claude sees tepid reception on iOS compared with ChatGPT’s debut

Welcome to Startups Weekly — Haje‘s weekly recap of everything you can’t miss from the world of startups. Sign up here to get it in your inbox every Friday. Look,…

Startups Weekly: Trouble in EV land and Peloton is circling the drain

Scarcely five months after its founding, hard tech startup Layup Parts has landed a $9 million round of financing led by Founders Fund to transform composites manufacturing. Lux Capital and Haystack…

Founders Fund leads financing of composites startup Layup Parts

AI startup Anthropic is changing its policies to allow minors to use its generative AI systems — in certain circumstances, at least.  Announced in a post on the company’s official…

Anthropic now lets kids use its AI tech — within limits

Zeekr’s market hype is noteworthy and may indicate that investors see value in the high-quality, low-price offerings of Chinese automakers.

The buzziest EV IPO of the year is a Chinese automaker

Venture capital has been hit hard by souring macroeconomic conditions over the past few years and it’s not yet clear how the market downturn affected VC fund performance. But recent…

VC fund performance is down sharply — but it may have already hit its lowest point

The person who claims to have 49 million Dell customer records told TechCrunch that he brute-forced an online company portal and scraped customer data, including physical addresses, directly from Dell’s…

Threat actor says he scraped 49M Dell customer addresses before the company found out

The social network has announced an updated version of its app that lets you offer feedback about its algorithmic feed so you can better customize it.

Bluesky now lets you personalize main Discover feed using new controls

Microsoft will launch its own mobile game store in July, the company announced at the Bloomberg Technology Summit on Thursday. Xbox president Sarah Bond shared that the company plans to…

Microsoft is launching its mobile game store in July

Smart ring maker Oura is launching two new features focused on heart health, the company announced on Friday. The first claims to help users get an idea of their cardiovascular…

Oura launches two new heart health features

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI considers allowing AI porn

Garena is quietly developing new India-themed games even though Free Fire, its biggest title, has still not made a comeback to the country.

Garena is quietly making India-themed games even as Free Fire’s relaunch remains doubtful

The U.S.’ NHTSA has opened a fourth investigation into the Fisker Ocean SUV, spurred by multiple claims of “inadvertent Automatic Emergency Braking.”

Fisker Ocean faces fourth federal safety probe