3 Reasons Why NFX Invested In Forum Brands

Written by James Currier
James is a General Partner at NFX, a seed-stage venture firm headquartered in San Francisco.

Forum Brands Founders

Forum Brands is a fast-growing digital consumer goods company based in NYC. Today they announced it has raised $27 million in equity funding. They are a group of brilliant ex-Amazon, private equity, and eCommerce tech alums who are building a unique approach to rolling up Amazon marketplace e-commerce brands.  They identify promising direct-to-consumer durables brands, acquire them, and help them accelerate into the omnichannel retail of the future with far greater reach and margins. It’s how you would build the next P&G or Unilever if you started today.

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There are other companies doing something similar, but this team has a serious twist to their approach.

When we were Founders ourselves, we rarely got an inside look at how investors made decisions. That’s why for the benefit of the Founder community we’re making known the three reasons we invested in Forum Brands.

 

1. Team with very specific experience

The core of the company is made up of Amazon alums who know the playing field and its nuances.  They are joined by M&A experts, data scientists, GSB and McKinsey grads, digital marketers, and engineers who have all worked on DTC business in the past.  The precision and speed we saw from this group exceeded anything else we had seen in the space.  Further, they genuinely enjoy working together, and seemed proud of each others’ work.  Always bet on the team and on team culture.

 

2. The market is vast and just beginning

It’s estimated there are 6 million merchants selling goods on Amazon. Most of these aren’t large, but we know that over 50,000 sell over one million dollars each year.  And this doesn’t count merchants selling mostly on other channels like Etsy, WooCommerce, or Shopify who could be brought to Amazon Marketplace.

A large ecosystem will emerge, including new commerce networks, SaaS software, financing, cross-marketing, transaction engines, and even some global brands.  This is how the new CPG’s will emerge. Some roll-ups will focus on different sectors such as health, food, durables, or entertainment, etc.

When new markets are being born at this size and speed, many billion-dollar companies will be created. The decision to invest in Forum Brands was not the typical question of will they beat everyone else, but can they win one of many important sectors in the enormous new-CPG playing field.

 

3. A twist with Network Effects

Others in this space have approached the business more as a balance sheet exercise and the mechanisms of M&A. Forum excels in both those areas, but has an approach that is more software and network effects-driven.  I’ll let them reveal that over time.

This is going to be a great time and place for Forum to build a large and lasting company. If you’re into the future of commerce and retail and have the tenacity to work with the best team in the space, you should contact Forum Brands.

jamescurrier