Razor and Perch merge to raise $100M at $1.7B valuation with further rollup integration

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Just days after Thrasio's bankruptcy, two other important players in the e-commerce aggregator world are merging and raising additional capital to strengthen their businesses and double down on a model they believe still works. Masu.

Berlin's Razor Group acquired US-based Perch, in addition to other private investors, raising just over $100 million led by Presight Capital.

The company says the combined business has an enterprise value of $1.7 billion and has approximately $400 million in debt on its books, which, as far as we know, is not due for at least another four years. (That debt restructuring was part of the new terms of the deal, people told us.)

This news is the latest development in broader consolidation and reordering happening in the world of e-commerce aggregation. Sources said Perch had been looking for a buyer for the better part of a year. Prior to that, he was one of the companies that acquired Web Deals Direct and acted as an integrator. Razor has also been gradually acquiring smaller aggregators like Stryze and Factory 14, and other companies are also following his M&A path.

Most directly, Thrasio is in Chapter 11, even though it has raised about $3 billion to fuel its business of acquiring and integrating retailers that sell products on Amazon's marketplace. Today's transaction took place less than a week after applying for protection.

People close to the deal say Perch and Lazer share common investors with Trasio and have seen their rival cut jobs and shutter operations, even as Thrasio's problems led to bankruptcy. He claims that he did not know that it would end in .

“We didn't think equity investors would actually allow it until Chapter 11,” one source told TechCrunch, citing the billions of dollars raised and the value that would disappear as a result of the filing. . Perch and Razor happen to have common investors, such as Victory Park Capital, which may have been central to negotiations between the two companies.

Investors that backed Perch (including big-name venture capital firms like SoftBank, Spark Capital and Victory Park) will own about one-third of the combined company. Razor's backers, which include L Catterton, BlackRock, Upper90, Global Founders Capital and dozens of others, will take a two-thirds stake. Razor's last valuation was $1.2 billion when it raised funding about a year ago.

The business model behind e-commerce aggregation always looks strong on paper. Millions of retailers sell on marketplaces like Amazon, relying on the e-commerce giant's storefronts, algorithms, logistics, and fulfillment operations. Consolidating the most powerful of these will give these businesses greater economies of scale, allowing them to develop products, manufacture products, and source more information about what consumers actually want to buy and use. A new path will open up.

The big question was how to cost-effectively consolidate operations and move forward on a single platform, an area that is always challenging for any business. The big question now is why investors are still willing to back aggregators when so many are proving so difficult to operate.

“We're founder-led, and that's really important, especially with our position in the cycle,” CEO and co-founder Tushar Ahluwalia told TechCrunch today. “We don't need mercenaries, we just need people who think like founders. It takes heart and soul. We've also always focused on customers and a supply chain that is agile and responsive to market needs.” As previously explained, the company is focused on technology, and in addition, it wants to further emulate the “C2M” (consumer-to-manufacturer) model it has been building in Asia. He added that there is. Something like Shane.

“I think we've certainly tackled this problem and seen it, and we've also seen the writing on the wall that we can tackle this problem early on and that can drive capital efficiency. We are integrators,” he added.

He claims the deal solidifies Razor's position as a “market leader” and puts it on track for $1 billion in revenue over the next four to eight quarters. There will be a profit in the end, he added.