Earlier this year, Society Brands raised $204 million in an institutional capital led by i80 Group to fuel acquisitions for the e-commerce aggregator.
The tech enabled consumer products company is using the investment to do roll-ups in the e-commerce space, becoming essentially a house of brands, says Society Brands CEO Michael Sirpilla.
“We acquire consumer product brands that specialize on either Amazon or their own direct consumer website,” he says. “There's obviously millions of third-party sellers on Amazon and there's millions of brands that use the Shopify platform. So, what Society Brands does is we acquire those brands and we find that a lot of those entrepreneurs are youthful in nature from the perspective that they're not looking to retire sometime soon. Since that's the case, we actually like to keep the founders on board. We actually ask post acquisition — they get to enjoy liquidity, we acquire 100 percent of the company but we ask for the founder to stay on board for a few years and be part of our culture, our community, our ecosystem of founders that are essentially part of the society.”
Launched late in 2020, a raise of more than $200 million in equity and debt capital is significant, especially for a company as young as Society Brands. Sirpilla says he was looking to raise at least $100 million and partnered with SenaHill Partners, a New York-based merchant bank, for the process. Sirpilla says he talked to many alternative lending funds and growth equity funds, and had several offers around the $100 million range. Not only did i80 Group offer twice as much as they were hoping for with terms that were fair, he says they also were an incredible culture fit.
“From the very first call that we had with them, we felt a really good connection with them, outside of the fundraising side of things,” he says. “I'm a big believer in relationships. I'm a big believer in, if you're going to partner with somebody on the equity or debt side, you really need to be able to feel like there's a good culture fit there. And we certainly had that with the i80 Group.”
Sirpilla says the company went looking for funds on its own for a while before connecting with i80. What they learned, he says, is that while his team has good operators with a lot of e-commerce experience and experience with two M&A roll ups in separate industries, investment bankers spend their careers helping companies raise capital.
“Even though hiring a banker costs money, I would encourage people to not look at it that way because I think that a good banker really pays for themselves and that's certainly what we found with SenaHill,” he says. “We tried it a little bit on our own but we would always get a little bit distracted with the fact that we're operating a business and trying to scale our business. So, hiring a banker is certainly a smart thing for many entrepreneurs to do.”
The company talked to several investment banks before choosing SenaHill. And the overall process took a few months. It started with getting their data into a data room, then they began speaking to many capital providers over the course of several months. The appeal of i80, he says, started with the first call.
“We were on a Zoom and it just felt right,” he says. “We didn't even talk about any numbers or how much they would be looking to invest and things like that at that point; there was a general ask but we really didn't talk about that so much. It just felt like a good culture fit. And I feel like one thing that maybe I have a talent with is having a good gut feeling about people. I remember getting off of the Zoom and calling our investment banker and had a few of our team members and I said I think that this could be our capital provider. It was very early to say that but I really felt good about it. There needs to be mutual trust and also they were willing to be patient with us, too. They knew that we had several interested parties. They understood that and they were willing to be patient. But it always went back to i80 for us. It was always the one that seemed to make the most sense and they've been an incredible partner ever since.”
Sirpilla spoke on Dealmaker TV's DealTalk program about the company’s growth since its launch in 2020. Hit play to catch the full conversation.