“Amazon with soul” Fab raises $150m Series D

Jason Goldberg
Jason Goldberg

Jason Goldberg

Fab CEO Jason Goldberg today defended his company’s decision to raise a $150m-plus Series D funding round and outlined ambitious plans to join the ranks of Amazon, Alibaba, eBay and Rakuten.

The new funding round, announced yesterday, is led by China’s Tencent Holdings and joined by Japan’s ITOCHU Technology Ventures, and existing investors. It puts Fab at a pre-money valuation of $1b and brings the total investment funds raised by the two-year-old design commerce company to $310m. The company intends to add another $50m to $100m to its Series D round in coming months.

What’s it going to do with all that cash? According to media reports and Goldberg’s blog post today, the fresh funds will go towards:

  • International growth – following up progress in Europe (now making up about 30 per cent of global sales) with an expansion to China and other parts of Asia 
  • Two new Fab-operated warehouses – in the Netherlands (due to open in 2013) and Las Vegas (its second in the US – due to open in 2014)
  • A big push to develop 100 per cent exclusive Fab products
  • New mobile and social features and a general boost to logistics and operations

Tencent – the world’s third largest internet company and a strategic investor for Fab’s expansion to Asia – will appoint a director to the company’s board.

Fab versus Amazon versus Groupon

“There are currently only four eCommerce companies in the world that are valued at more than $10 billion: Amazon, Alibaba, eBay, and Rakuten. We believe that Fab has a legitimate chance to be the fifth by leading in ’emotional commerce’,” Goldberg wrote.  

“To put all this in perspective, Amazon has raised a total of $5.3b in equity and debt since 1997. Building a large eCommerce business is capital intensive, but there are several winner-take-all opportunities and Fab hopes to capitalise on at least one of those in the global market for emotional products.” 

The company has the track record right now to back that big talk up. When Fab launched as a flash sales website in June 2011, it scooped up one million members in five months. Now, as a designer goods online shop in 27 countries with the first of its physical stores opening in Hamburg, Germany, it’s sitting on 14 million members. While still unprofitable, Fab is on track to bring in $250m in revenue this year.

Are there uncomfortable comparisons to be made to troubled deals giant Groupon, as some critics suggest? Yes – unprecedented growth in a new eCommerce category and an ever-growing list of heavyweight investors.

But while Groupon’s investors and managers pushed it too far, too fast, Fab is apparently not driven at all by cash targets:

“At our all-company meetings and in investor discussions, I’m now famous (or infamous?) for repeating the same line over and over again: ‘I don’t give a shit if we sell $200m this year or $300m this year, what I care about is that we wow our customers everyday and build a brand for the decades’,” Goldberg wrote today.

That’s good to hear. One important similarity still sticks: Fab faces an uphill battle to scale while maintaining quality and company culture. Goldberg wants Fab to be the anti-Amazon: selection and speed but for thoughtful, high-end purchases rather than commodities. If it can keep the emotional connection with customers it needs and still grow to Amazon’s size, that’ll be one for eCommerce’s record books.

Image credit: via Fab