Are you into the e-commerce business, which has laid a strong foundation but cannot scale it beyond a certain point? Are you finding it difficult to understand your current position in the market?
A boom has been seen in Direct–to–Consumer (D2C) market owing to the pandemic, as the entire nation was forced to pillion on the online platform for their various needs. India is one of the largest global retail destinations with over 1.35 billion potential customers and, by 2025, foresees a growth in the market size of over $1.7 trillion.
Though the opportunities are immense in a highly competitive and volatile marketplace, mid-size enterprises find it difficult to scale their business, and this is where e-commerce roll-up startup 10Club, has raised $40 million in a seed round in just nine months.
Since its inception, 10Club lends a helping hand to growing its business by capturing the potential of the market with the right data, insight, technology, and supply chain, which results in scaling and efficiency.
The Thrasio Model with a Twist
The Thrasio model has gripped the continents like a wave where new startups are formed in tune with this popular model and raise funds within a short period and become unicorns.
So what is this Thrasio Model?
It was founded in 2018 in the US, where it acquired third-party sellers from Amazon and helped them with resources to grow their brand. Currently, the company is valued at $6 billion based on its latest funding rounds.
Though 10Club is inspired by the Thrasio model, in reality, it functions with a twist.
Firstly, 10Club acquires only those enterprises that are running profitably, so that it can help them grow 10x. Secondly, 10Club acquires companies in similar spaces and bunches them up. This helps the model, though they are growing 10x, they are focused and sedate.
By this approach, so far 10Club has acquired eight brands from three categories – sports, home, and baby care.
Join the bandwagon at 10Club
The pandemic gave a great impetus to D2C brands who found an online platform for business. But this sudden shift to an online model of business had multiple challenges faced by enterprises. While some mid-sized businesses thrived and were profitable, they faced a problem with growth.
As a result, many of these third-party sellers were acquired by multinationals, had to find unconventional ways to scale up, or approached financial institutions to raise capital.
While big brands like Nike, Puma, and venture capital-funded brands like Mama Earth find it easier in the growth spiral, but then there is a third category that is neither big names nor gets venture capital to support due to their small size of business, but this is the category where digitization has already set in and will gather momentum.
This is the space where e-commerce roll-up startup 10Club can bring another dimension to this ecosystem. Where the startup acquires 100% of the business and runs the operations for the founders, giving them a stake, the founders can agree to be part of the team for the next 4-5 years and work in the space where they are best at, like product development and ideation, while they draw incentives or may look into an early exit.
Before its launch in January 2021, the co-founders researched and deep-dived into the e-commerce space and understood the sellers’ pain points, the market need, and the categories to focus on.
For acquisition, 10Club understands the strength and weaknesses of the company and does intensive research to understand its issues, and then follows the process of integration, which takes several weeks.
Companies clocking high revenues are preferred portfolios, like Rs 40-80 crore in the home category and Rs 15-25 crore in the sports category. It enables 10Club to burn the revenue to grow 10x and maintain a margin of 25 to 27 percent of EBIT as these companies have high cash flow.
The founders of 10Club
The co-founder and CEO of 10Club, Bhavna Suresh, started her entrepreneurial journey with clothes rental firm Style Bank and was also CEO of Lamudi, a Philippines-based real estate platform. She started her career at 22-Foot Tribal Worldwide as a Business Development Manager.
Deepak Nair is the digital marketer, advertising strategist, and business strategist for 10Club. He is the co-founder, along with Bhavna Suresh and Joel Ayala. Before founding 10Club, he was the CEO of White Canvas Communication Pvt. Ltd. and also the CEO of 22 Feet Tribal Worldwide.
Co-founder Joel Ayala is a San Francisco-based investor and also a Managing Partner and Co-Founder of Class 5 Global LLC, a venture firm that invests in next-generation global investors.
Investors and Funding for 10Club
10Club follows a tried and tested model which enables the clients with a quick and actionable solution and how to take it forward and scale it up to 10x with its in-house tech experts, processes, and playbooks.
The company was founded in 2021, and in this short period, it has raised a hefty amount of $40 million as one of the largest seed capital in the e-commerce roll-up space.
In this funding process, Fireside Ventures is the lead investor and is co-led by Secocha Ventures, Hey Day, PDS International, Class 5 Global, and boAt founders.
As part of 10Club’s strategy of bundling up the enterprises, it has already acquired 8 brands under three categories: sports, home, and baby care. The brands acquired by 10Club are My Newborn, KraftSeeds, Gate Garden, Kriti Kalash, Skudgear, Aurion, Rapidotzz, and Beclina.
It is currently in talks with 20 more brands in the categories of sports, home, pets, and baby care, which are expected to be acquired in the next 6 months.
To Conclude
10Club operates in a B2B model and has successfully integrated businesses into its portfolio by taking advantage of the early mover. By signing LOIs worth $15 million, the company wants to collaborate with the promising businesses on e-commerce platforms and roll them up for growth. The future for e-commerce is for 10Club to grow 10x.
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