Following Heroes, who today announced a $ 200 million raise to double their third-party buying and scaling on Amazon Marketplace, another London startup aiming to do the same is announcing some significant funding of its own. Olsam, a roll-up game that is buying up both consumer and B2B merchants who sell through Amazon’s FBA fulfillment program, has closed $ 165 million – a combination of equity and debt that it will use to advance its M&A strategy as well as further expanding its technology platform and recruiting additional talent.
Apeiron Investment Group – an investment firm founded by German entrepreneur Christian Angermayer (first known for biopharmaceuticals, then investing and crypto, including a role in SoftBank investing in Wirecard) – led the Series A equity round with Elevat3 Capital (another Angermayer company, which has a strategic partnership with Founders Fund and Peter Thiel) also involved. North Wall Capital was behind the debt portion of the deal. This appears to be the first major funding of any kind the company has announced since its launch in October 2020. We asked for more details on how the $ 165 million split between equity and debt, and Olsam said it only disclosed the full amount. An evaluation will not be announced either.
Being an Amazon roll-up startup from London that happened to be announcing a fundraiser today aren’t the only two things Olsam has in common with Heroes. Like Heroes, Olsam is founded by brothers with track records who are well suited to getting into marketplace consolidators.
Sam Horbye previously worked for Amazon for years, including building and managing the company’s UK Business Marketplace (the B2B version of the Consumer Marketplace). Co-founder Ollie Horbye had extensive experience in strategic advice and financial services.
Together they had also tacitly built and sold previous marketplace businesses, and they believe that this collective experience gives Olsam – a trunk word of their names, “Ollie” and “Sam” – a head start in areas like building relationships with merchants; Identifying quality products in the midst of the vast sea of search results that often feel like they’re selling the same cheap junk; understand the challenges and opportunities of traders; and critically building relationships with Amazon and understanding how the merchant ecosystem fits into the e-commerce giant’s broader strategy.
Olsam also takes a slightly different approach with the target companies. Yes, it focuses on the common consumer game you hear about from consolidators – home & garden, sports, baby & kids products, and beauty are typical categories. But alongside that, it is also developing a strategy to sell these and other products on Amazon’s B2B portal – the one Sam built while working at Amazon.
B2B sales include items such as office furniture and supplies, but also electronics, auto parts and accessories, kitchen appliances, and actually everything that is potentially sold on the consumer marketplace.
The exception is that business customers – like you get at physical-retail member-only stores – get discounts on bulk purchases, tax breaks, and possibly a slightly different mix of products better suited to running their business.
B2B is currently one of the fastest growing segments in the Amazon marketplace and is also the most overlooked. “It’s under the radar,” said Ollie.
“The B2B opportunity is very exciting,” added Sam. “A growing number of retailers are selling office supplies or more random products to B2B customers.”
The estimates vary quite a bit when it comes to how many merchants around the world are selling it on the Amazon Marketplace. I’ve seen estimates of 6 million and nearly 10 million. But overall, these merchants had $ 300 billion in gross sales for the past year, and that number is currently growing 50% every year. Amazon itself states that online B2B sales as a category – beyond Amazon, but also via Amazon itself – is around 2.3 times larger than its B2C counterpart.
Combined with this opportunity, seller consolidation – to get better economies of scale in terms of supply chains, marketing tools and analytics, and more – is big business too. Quoting estimates from Marketplace Pulse, Olsam said that cumulatively, about $ 7 billion was spent on acquiring these companies, and there’s more: Olsam estimates that there are about 3,000 companies in the UK alone having sales of more than $ 1 million Amazon’s platform.
And to be clear, there are a number of other roll-up startups besides Heroes that have this opportunity in mind as well. Totaling hundreds of millions of dollars, others have taken steps this year including Suma Brands ($ 150 million); Elevate Brands ($ 250 million); Perch ($ 775 million); Factory14 ($ 200 million); Thrasio (currently probably the biggest of all in terms of reach and raised money and ambitions), Heyday, The Razor Group, Branded, SellerX, Berlin Brands Group (X2), Benitago, Valoreo and Rainforest from Latin America and Una Brands from Asia.
Sure, there may be room for all of these and many more to get into the roll-up opportunity, but it’s a more complicated equation in the longer run. That’s one reason so many of these companies also emphasize their organizational, M&A, and marketplace expertise: In the end, the technology these financially strong startups build is only as good as the dealers who buy it and the business plans which they then execute around their conglomerations.
“The senior team behind it I would be makes this business really unique, ”Angermayer said in a statement. “They have all been successful in building and selling their own brands in the marketplace and have worked for Amazon on their marketplace team – their understanding of this area is exceptional.”