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New York City-based Amazon aggregator D1 Brands raised $123 million in Series A funding, the company announced Wednesday. The investment, which comes less than a year after the company was founded, is the latest in the increasingly crowded field of startups looking to capitalize on the success of third-party sellers in online marketplace.
The round was led by CoVenture and Crossbeam Venture Partners, with an additional investment from ID8. D1 Brands declined to disclose its valuation or sales, but co-CEO and cofounder Yaz Malas says his company is profitable and predicts it will see revenue of $100 million by year-end. Competitor Thrasio, which has raised $2 billion to date, is valued at nearly $4 billion on 2020 revenues of $500 million, according to Pitchbook.
D1 is among a handful of companies that purchase third-party private labels and direct-to-consumer brands, which in turn sell on large-scale online marketplaces like Amazon and eBay. D1 currently owns 20 brands, ranging from MozArt, which sells arts and crafts supplies, to hair-cutting shears-seller Equinox, a flagship brand built by D1 cofounder Mohammad Usman.
“The pandemic hit and you had all these Amazon businesses that [doubled] in sales, and at the same time, this Amazon aggregator ecosystem is taking off,” says Malas, who cofounded D1 last September with Usman. “It was the perfect storm and we had the benefit of being one of the aggregators seeing a lot of opportunities.”
D1 is coming late to a party that has grown quickly during the pandemic: At least 69 companies acquiring successful brands on Amazon have raised more than $7 billion in capital since April 2020, according to e-commerce data firm Marketplace Pulse. More than 54% of the $386 billion in net sales that Amazon generated in 2020 came from third-party sellers, according to Amazon growth agency Jungle Scout.
The biggest player in the space is undoubtedly Thrasio, who has raised nearly $2 billion in funding since its inception in 2018. Bloomberg reported in June that the company is in talks to go public through a merger with blank-check company Churchill Capital V, set up by former Citigroup executive Michael Klein.
In May, Boston-based roll up Perch landed $775 million of investor funding, marking it the largest ever Series A raised by a consumer packaged goods company, according to Crunchbase. Amazon aggregator and Miami-based Unybrands closed $300 million in growth capital in July, while roll up Suma Brands picked up $150 million in funding just earlier this month.