The Thrasio-style startup is a new breed of startups that specialises in acquiring fast-growing digital-first brands and scaling their products. First started by three-year-old US startup Thrasio, which acquires successful third-party Amazon sellers and gives their founders a lucrative exit.
Founded in 2018, Thrasio made an incredible $100-million profit in 2020 on revenue of $500 million. The company is valued at $6 billion based on its latest funding round and now manages a global portfolio of nearly 100 brands.
The Process
The Thrasio-style startup follows a typical three-step process.
The first step is to know the seller and their business after one or two meetings.
To express initial interest, a Letter of Intent may be signed. After this, it carries out thorough due diligence and verification. If the startup is satisfied with the brand’s growth prospects, it attaches a valuation and undertakes the preparation of contracts to integrate the seller. And, finally, when the seller signs off, they receive the funds in their account. In some cases, the founders continue to receive a share of the profit going forward, even after selling their business.
From the start to finish, the process is completed within 8 weeks.
The brand goes through an integration process, following which the startup brings in its expertise across marketing, technology, supply chain, inventory management, logistics, and product development to scale the business rapidly.
Thrasio-style startups in India
Replicating Thrasio’s success, a number of startups have spawned in India in 2020. Some of them are Mensa Brands, GlobalBees, 10Club, Upscalio, Evenflow, Powerhouse91 and GOAT Brand Labs. Venture capital investors have poured in significant amounts of money into these startups in a short period.
— Founded by former Myntra CEO and Medlife co-founder Ananth Narayan, Mensa Brands raised over $80 million in two rounds of funding.
— GlobalBees set a record for the biggest Series A funding in India when it raised $150 million in June 2020, split equally between equity and debt.
— Nine-month-old 10Club raised $40 million in one of the largest seed financing rounds in India.
— GOAT Brand Labs, founded by former Flipkart executive Rishi Vasudev, closed a $36 million Series A round in July.
These companies acquire online brands across categories like fashion, beauty, personal care, food, home, sports and lifestyle.
They also target Direct-to-Consumer brands operating in niche categories and ship their products directly to buyers, cutting out middlemen like Amazon.
According to Amazon, in 2020, as many as 4,152 sellers on its Indian marketplace crossed Rs 1 crore in sales – 29% more than the previous year. This represents the untapped opportunity for the Thrasio-model startups.
These firms are enabling a new wave of wealth creation and value unlocking for India’s small businesses, which struggle to scale beyond a point.
