Only weeks after making its first investment in influencer marketing agency, Viral Nation, John Ruffolo’s Maverix Private Equity has led an $83.5 million USD investment in an e-commerce aggregator specializing in the Shopify ecosystem.
Maverix managing partner Michael Wasserman said the growth capital investment into Agora Brands was a combination of equity and debt that closed in March, but declined to disclose the breakdown. Additional participation came from Palo Alto-based Foundation Capital and Victory Park Capital.
As part of the financing, Wasserman has joined Agora’s board of directors, along with Jonathan Ehrlich, a partner at Foundation Capital.
Agora Brands’ business model is to acquire small-to-medium sized direct-to-consumer businesses with $1–20 million in annual revenues, primarily within the Shopify ecosystem. The founders of those businesses benefit by continuing to build their brands, strengthened by the power of the shared services and operational efficiencies delivered by Agora’s aggregated model.
Wasserman told BetaKit the financing will go towards “ongoing acquisition of additional ecommerce brands, along with technology implementation and further build out of operational infrastructure.”
Like Viral Nation, the investment in Agora follows Maverix’s stated intention of investing in traditional businesses heavily utilizing technology.
“Agora is a perfect representation of our growth investment thesis,” said Wasserman. “We invest in outstanding people and high-growth businesses that are using technology to disrupt a traditional industry, in this case retail and ecommerce.”
Ecommerce sales skyrocketed during the pandemic claims Agora, and despite some acute macroeconomic challenges, U.S. retail ecommerce sales are projected to continue growing rapidly at a compound annual growth rate of 12.5 percent, becoming a $1.65-trillion market by 2026.
To date, Agora has acquired brands and businesses across a wide range D2C categories, including automotive, apparel, personal wellness products and home goods.
Two of the company’s three founders, Jesse Horwitz and Ben Cogan, have a Canadian connection as a venture partner with Toronto-based Clearco. The company’s venture partner network is meant to give Clearco portfolio companies access to financial and strategic knowledge that typically comes with taking capital from a traditional VC fund.
Along with Horwitz and Cogan, Agora’s third co-founder is Ray Cao. Cogan and Cao co-founded Hubble Contacts, one of America’s fastest-growing direct-to-consumer e-commerce companies. Raising $74 million, they scaled Hubble to 30 countries and nine figures in revenue. They’ve also co-founded several other DTC businesses including Mockingbird Strollers, Willow Underwear, and Harper Coats.
Agora does face competition in the ecommerce aggregator space, notably from two Canadian companies: Emerge Commerce and WeCommerce. While Emerge acquires and operates niche, North American market leaders in the digital deals space, WeCommerce specifically acquires businesses within the Shopify ecosystem.
At this point, Maverix has more than half of its targeted $500 million fund in place. The $350 million comes from anchor investors CAAT Pension Plan, British Columbia Investment Management Corp, Bank of Montreal (BMO), Canadian Imperial Bank of Commerce (CIBC) and Mattamy Asset Management, and includes investment from some family offices as well.
Rather than a pure tech focus, Maverix aims to invest in “traditional businesses” of around $100 million revenue in size, in the areas of healthcare, financial services, transportation and logistics, and retail. Maverix is also pursuing deals for a significant minority position of 20 to 40 percent.