Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
The story behind this began several years ago when CJ and I were trying to sell our e-commerce companies. The process was the most stressful experience of our lives. Drawn-out negotiations. Terrible payment terms. The buyers wanted us gone. We lived with a fear that the businesses we worked so hard to build would be sucked dry and spit out as a shell. We have sold 5 companies and experienced this pain before.
Unlike technology businesses where a large group of buyers exists, e-commerce has an anemic acquirer base. We started Moonshot Brands to fill this gap and make getting acquired approachable. We work with both direct-to-consumer brands and those that sell on online marketplaces.
Our timeline is fast: we provide a valuation within 48 hours and close in 45 days.
We don’t restructure companies. Since founders who have achieved product-market fit are onto something, we want them to join and build with us. We bring the experience and resources to help them grow.
Unlike private equity firms, we’re not in it for short-term gains that leave customers and employees on the hook. We invest long-term and make money from sales growth on the e-commerce sites.
Our goal is to build the acquisitions company that we wish would have existed when we sold our own businesses. The e-commerce sector is growing rapidly, so the timing is right. We have $160M in funding and $15M in revenue to date.
If you know a founder of a profitable e-commerce company looking to sell email allanf@moonshotbrands.com. We pay finder's fees for successful intros. Also, we're hiring, if you know of any great marketers, devs, or BD email or apply here https://moonshotbrands.breezy.hr.
We’re excited to tell you about this so if you have questions we’d love to hear from you!
74 comments
[ 2.7 ms ] story [ 131 ms ] threadEquity in big, fat growing company...
Help from shared pool of resources/experts taking a company from $5-20MM (easier) in sales to $100-300MM+ (harder) in sales much, much faster...
Help widening margins on high revenue...
Probably some sweet incentives if they do... Etc...
It makes sense. This isn't particularly innovating, but I have a feeling everyone here will be cleaning house soon enough.
I think some details on what you are looking for (even from a broad sense, like what category, do you allow single product dropshipping, shopify, custom application, etc).
Also there is tons of ecommerce sites on websites like flippa and others, why not look there?
Most if them are focused on amazon FBA which I honestly don‘t understand. This generic approach sounds better to me.
Also, for anyone reading this, if you’re a high income individual or have come into a windfall from RSUs/Stonk/inheritance/coin there’s marketplaces and plenty of access to brokers if you want to buy your own shop.
Lot of sellers under $1MM ARR will sell their company at like 2-3x (!) which if you can just maintain or improve just slight, a couple years becomes pure cash vehicle. I know a few folks who navigate this space and make great money buying very small and profitable businesses too low-profile for PE to care for.
Do you recommend any specific marketplaces?
On your point on brokers, we get our leads a variety of ways, including by building great relationships with brokers.
And your last point for sure the higher the ARR the higher the multiple generally (at extreme someone like Proctor and Gamble trades 20x-40x). What we find from our experience is that there are folks that are asset rich (meaning the company is ebitda positive) but cash poor because all the money goes back into inventory/product launches etc... Moonshot is flexible and can help them take money off the table, and then get upside in the future.
Edit: nevermind, I see now that they are in fact YC-backed. Don't think I've ever seen YC back another "fund"
Why not? YC backs a lot of things that don't necessarily look like a classic "software company".
There, now it's YC compatible.
More specifically it will be about scaling the brands they buy and cross-selling when possible. A lot of e-commerce brands/founders hit a ceiling around $1-5M in revenue. At that point, you need more experienced operators to get to $10M or $100M. People who know how to optimize marketing, conversions, fulfillment, and who can move into new channels (eg get on shelves at Target or Costco). A lot of online store founders don't want to deal with that.
Once they hit a certain number of brands under their umbrella, there will be cross-selling/marketing opportunities (assuming they're not just buying Amazon FBA drop ship brands). They can combine email lists and will eventually have good data to power product recommendations.
I'm guessing here, but the long-term play is eventually put all brands under a single online store–in other words, a new amazon.
Are you going to be approaching it via a similar acquisition financing mechanism? Buying at 2-3x SDE for a mix of cash and Moonshot stock issued at 10-20X Earnings?
Contrived example: Say a company has $1m, $500k, 100k in sales, gross & profit respectively... is that enough information for a starting point? How do marketing mix, growth, sector and other such factors play in?
Also, since it sounds like you are running these as going concerns, what happens if/when founders and key employees aren't included in the acquisition or move on? Is running companies directly an avenue, and if so, are they still run as independent units?
Lastly, do you dabble in grey areas between outright acquisitions and partial ownership?
Also interested in your terminal destination... but other comments have covered this.
but seriously how we are defining it for our business is private label sellers of physical goods. So you own a brand that sells on Amazon or DTC, and your products have your brand on it. The supply chain varies from folks who own their own manufacturing to others who source from suppliers and never touch their product it just straight to amazon FBA. But not drop shippers, not software, not online marketplaces.
The latter provides a new funding mechanism for e-commerce companies.
And congratulations!
I'm surpised, and a bit saddened, to see YC investing in a PE rollup kind of play. I’m probably reading too much into it, and maybe I had a misconception about YC was supposed to be, but to me, the brand was about innovation and scrappiness. YC founders use technology to move the world forward, usually through a better product. This brand conglomerate is way more blatantly of the form of “lets try to take a pile of money, and turn it into a bigger pile of money”.. of course they need $160M in funding, it is a fund. That money will go chiefly to buy companies, not into massive scale.
Not many entrepreneurs start out hoping to engage in raw capitalism, guided purely by returns. YC seemed like a place that catered to that dream of building something for yourself. Maybe that was never true, and I just had stars in my eyes. Maybe there’s no longer those low hanging fruits and everything’s become harder. But this seems almost of a betrayal of that original dream, only showing that YC is the same as everyone else in our capitalistic society.
The good news is it's never been easier to bootstrap the phase YC traditionally got you through, and there are a lot more resources and higher level of sophistication from other providers. This is thanks to YC in a large part, but their role and focus has changed.
Also your blog points to a couple of generic blog post.
I ask because a good friends of mine who works in private equity was telling me about how ridiculous and inefficient he though the process was. Apparently it's a drawn out process of emailing Excel spreadsheets back and forth.
Interestingly this is somewhat how Wayfair began back when they were known as CSN Stores. They started out looking to buy some ecommerce companies and realized they could arbitrage Google search with high specialized ecommerce sites. Of course it is different - they ended up creating the stores vs. buying other people's stores.