Another day, another unicorn.
Faire, which operates a wholesale marketplace for independent local retailers and makers, announced today it has raised $150 million in a Series D round co-led by Lightspeed Venture Partners and Founders Fund. The round brings its total funding raised to date to $266 million, and values the company at $1 billion. It included participation from existing investors such as Forerunner Ventures, YC Continuity, and Khosla Ventures.
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San Francisco-based Faire is just two years old, and growing fast. It was founded with the mission of helping local retailers and makers “break free from the inefficiencies of an antiquated wholesale model.” At the beginning of 2018, Faire averaged less than $1 million in sales per month. Now, it says it has surpassed $1 million in sales per day. Last December, it noted reaching $100 million in run rate sales.
The startup employs more 193 people across three offices in San Francisco, Kitchener-Waterloo (Ontario), and Salt Lake City. That’s up from 51 employees this time last year, according to the company.
To date, Faire has on-boarded 7,000 makers and 50,000 local retailers onto its marketplace and sold more than 15 million products. In 2019, the company expanded to include international makers from 39 countries and brought Canadian retailers onboard this month.
Faire says it plans to use the new capital to “expand into new markets, improve our marketplace, and continue building tools to free up our customers to focus on the mission that got them started in the first place.”
Founder and CEO Max Rhodes said the round is not an indicator of success.
“Raising money is sometimes mistaken for success,” he said in a blog. “We view this fundraise as an important milestone for the future of retail. Our success will look like more diversity in local communities — special and unique downtowns where people can discover high-quality items sold in stores owned by their neighbors.”
The Series D comes less than 11 months after the company raised $100 million at a $535 million valuation, which I covered at the time.
Faire is clear that the road to get to this point wasn’t without its bumps. In a December 2018 blog, Rhodes related how in January of that year, “a shocking percentage of the products we’d sold got returned, and an even more shocking number of retailers never even paid us.”
“We were losing serious money on every order we received, and the growth wasn’t slowing down,” he wrote.
So, Faire then did what any startup that is focused on growth does. It pivoted. The company tweaked some of the rules of the marketplace, imposed credit limits on retailers, re-ranked makers and products, and made it easier for retailers to pay their invoices.
Within six months, return rates were down by 75 percent and defaults decreased by almost 90 percent, according to Rhodes.
It should be noted that Faire also has bootstrapped a prediction algorithm that it says will get smarter as its feed its own sell-through data into it. The former Square executives (Rhodes, for example, was the first product manager for several key initiatives at Square, including Square Capital and Square Cash, per his Crunchbase bio) said they learned from their time there “the power of combining technology with well-trained human intuition.”
Illustration: Li-Anne Dias