It’s an obvious statement, but the Amazon marketplace is massive. 200 million Prime customers happily browse millions of listings, spending more than $300 billion annually. E-commerce is growing at a torrid clip (40% in 2020), and most product searches now start on Amazon. The stats below are eye-opening:
Source: State of the Amazon Seller 2021, Jungle Scout
The vast majority of transactions on Amazon involve third-party sellers, and the lion’s share of those sellers are entrepreneurs. Successful third-party sellers thinking about a liquidity event have historically had limited options. A seller’s footprint is likely too small for a traditional private equity or brand acquisition, creating a gap in the ecosystem. And there are a number of reasons why selling would be appealing if there was an available option:
- Third-party sellers can become victims of their own successes, as cash flow is consumed by the working capital needs of the business, and an entrepreneur’s credit card balance creeps higher and higher as the financing needs of the business become unwieldy.
- A desire for a payday and to move on to new ventures can arise.
- Life events happen, and liquidity can help with paying an entrepreneur’s mortgage or sending children to college.
Enter Amazon-focused acquisition platforms… over $4 billion of debt and equity has poured into platforms in the past 24 months. We have seen many of the approaches and are excited to announce our investment in Forum Brands, a New York-based acquirer and operator of e-commerce brands. We are leading an equity investment in the platform alongside NFX and a number of prominent angel investors. We are thrilled to be partnering with co-founders Brenton, Ruben, and Alex. The team’s sophistication and approach to a technology-led acquisition and operations platform is compelling. While competition in the space is certainly building, we don’t foresee a situation where this becomes a winner-take-all market. Forum’s deliberate acquisition strategy and thoughtful operations playbook compelled us to move toward a partnership and shy away from other platforms we’ve conducted diligence on to date.
The Forum Brands Team: Background, Talent, and Hustle
As one partner highlighted during diligence, “This is the exact team you want to back for this opportunity.” Brenton, Ruben, and Alex have varied, complementary backgrounds, and work well together. They have also built a collaborative, execution-minded team of technologists, operators, and financiers to drive growth. With backgrounds in private equity, strategy consulting and more than 13 years of collective experience at Amazon, it’s the unique combination of talent and experience needed to successfully acquire, onboard, and scale brands.
The team is deliberate in its hiring, with a focus on finding new hires who espouse the culture, work ethic, and precision the current team of 25+ underscores. The Forum Brands journey is just beginning – if you have interest, check out their careers page.
The short-term goal for Forum, like other Amazon-acquisition platforms, is relatively straightforward – aim to acquire and grow e-commerce brands, starting within the Amazon ecosystem. However, the appeal of the Forum approach is that the team is thinking long-term – they are building a technology backbone and approach that will benefit the platform for years to come.
Equally important, the secret to Forum Brands’ success is the two key pieces of platform infrastructure: a deal sourcing engine and an operations technology platform. The deal sourcing engine enables highly targeted, efficient messaging to potential sellers. This efficiency allows the Forum team to have more frequent and high-quality interactions with entrepreneurs, and the results are terrific. The operations technology platform is just as important. Analytics drive recommendations across all functional areas of a brand, from inventory buying to merchandising. The platform is designed to handle channel expansion as well, helping brands navigate new marketplaces, DTC opportunities, and wholesale accounts. We found this approach unique.
A Differentiated, Deliberate Strategy
This rare combination of talent and a technology-led sourcing and operations model is compelling. With a multi-year strategy and a singular opportunity, the Forum team is poised to permeate deep into the Amazon ecosystem and across additional channels as they continue to scale and build brands.
We’re thrilled to join them on this journey.