What's your valuation algorithm? 2-5x EBITDA or gross profit?
Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
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Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#22Ya, owning several ecommerce sites there is nothing on this site that says if you would be even interested. I think some details on what you are looking for (even from a broad sense, like what category, do you allow single product dropshipping, shopify, custom application, etc). Also there is tons of ecommerce sites on websites like flippa and others, why not look there?
good point, here is basic criteria:
Private label brands
$3M-$30M in revenue
15%+ net margin
Predominantly on Amazon but also open to Shopify/DTC brands that are profitable.
Allan built HomeSav focused on home goods ("everything from couches to candles"), and we also like sporting goods, office, home improvement, etc...
In terms of products staying away from fast fashion, electronics that can become obsolete.
We don't do drop shipping, software etc...
Looking globally
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#23What's your valuation algorithm? 2-5x EBITDA or gross profit?
yes focus on EBITDA. In some cases there is a metric called SDE which is seller discretionary earnings that has some additional add backs.
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#24Sounds a bit like Rocket Internet's business.
Which part of their business?
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#25What's the actual business model here? Y Combinator shouldn't be backing a tiny PE fund, so this can't be that. What's the angle? There must be some financial engineering in the buyout or some unique plan for post-sale.
Not saying you're wrong, but where do you see that they are backed by YC? This reminds me of Thrasio and all the similar companies that have had success with buying Amazon businesses. I assume they have quantities of scale with in-house devs, operators, etc., which gives them a built in advantage. Edit: nevermind, I see now that they are in fact YC-backed. Don't think I've ever seen YC back another "fund"
Participating in YC was hugely valuable for our team, we had great mentorship, access to an amazing network of founders who have provided advice as we launched Moonshot, and of course investors. I don't know what their criteria is for accepting us, but I think the fact we were multiple time founders that had built operational and technology company and that there is a big opportunity to apply technology to every step of acquire, operate and grow in our model. We also love the idea of building something like Startup School for ecommerce entrepreneurs. One day we hope that ecommerce entrepreneurs want to be a part of Moonshot the same way we wanted to be part of YC. Finally as we build tools for ourselves we could potentially make those available to the millions of ecom sellers out there.
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#26One of the problems with acquiring e-commerce business is that most of them are not very well ran. Most do not even know their COGS or margins, thus making them horrible acquiring targets because you don’t know what you are buying. Might work at scale though. Good luck with the venture though, good idea.
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#27Simple but important question: What is e-commerce?
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#28What are your thoughts on the acquisitions that Aterian ($AETR) has done in the last 6 months? Are you going to be approaching it via a similar acquisition financing mechanism? Buying at 2-3x SDE for a mix of cash and Moonshot stock issued at 10-20X Earnings?
Its probably too early to say how Aterian (mowhawk) acquisitions will work out. In terms of structure we are early enough that we are creating deal structures for each entrepreneur that makes sense for them. Some would prefer all cash, others would like to have more upside in the future. We want to meet the entrepreneur where they are and create a deal that aligns incentives. And we are not public so its a different conversation around including Moonshot equity in any deal
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#29You should partner with adleaks. They love this stuff.
Re: Launch HN: Moonshot Brands (YC W21) – We buy and grow e-commerce companies
#30What does your valuation process look like? Are the prospective buyers uploading csv dumps from their ecommerce store e.g. shopify, woocommerce, etc.. Or are you integrating into these stores to pull the info you need?