Thrasio-style
The Thrasio-style startups are those new kinds of startups that specialize in acquiring fast-growing digital-first brands and scaling their products. This was first started by US startup Thrasio, which acquires successful third-party Amazon sellers and gives their founders a lucrative exit.
Thrasio was founded in 2018. It made a whopping profit of $100-million in 2020 on revenue of $500 million. Thrasio is valued at $6 billion based on its latest funding round. The firm now manages a global portfolio of nearly 100 brands.
How does it work?
There are three step processes followed by Thrasio-style startup. In the first step, the seller and their business will understand each after one or two meetings.
A Letter of Intent may be signed to express initial interest. It carries out thorough due diligence and verification after this process. The startup attaches a valuation and undertakes the preparation of contracts to integrate the seller if the startup is satisfied with the brand’s growth prospects. Finally, when the seller signs off, they receive the funds in their account. In some cases, the founders continue to receive a share of the profit going forward, even after selling their business.
The process is completed within 8 weeks. The brand goes through an integration process. As a result, the startup will bring in its expertise in various streams. It includes, marketing, technology, supply chain, inventory management, logistics, and product development to scale the business rapidly.
India’s Thrasio-kind startups
After the success of the Thrasio model, a number of startups emerged in India in 2020. Some of them are Mensa Brands, GlobalBees, 10Club, Upscalio, Evenflow, Powerhouse91 and GOAT Brand Labs. Venture capital investors have generated funds into these startups in a short period.
Mensa Brands raised over $80 million in two rounds of funding. The company was founded by former Myntra CEO and Medlife co-founder Ananth Narayan. GlobalBees raised $150 million in June 2020, split equally between equity and debt. This set a record for the biggest Series A funding in India.
10Club, after 9 months of its forming, raised $40 million which is one of the largest seed financing rounds in India. GOAT Brand Labs, founded by former Flipkart executive Rishi Vasudev, closed a $36 million Series A round in July.
Helps small businesses
These firms acquire online brands across categories like fashion, beauty, personal care, food, home, sports and lifestyle. These firms also target Direct-to-Consumer brands operating in niche categories. What they do is, they ship their products directly to buyers, cutting out middlemen like Amazon.
In 2020, as many as 4,152 sellers on Amazon Indian marketplace crossed Rs 1 crore in sales. This is 29% more than the previous year. This shows the untapped opportunity for the Thrasio-model startups.
These firms are helpful in creating a new wave of wealth creation and value unlocking for India’s small businesses, which struggle to scale beyond a point.
