Fab Raises $105 Million in VC Funding
You can't fault Fab.com for lack of ambition.
Just eight months after a $40 million funding round, the stylish flash deals website has closed a $105 million series C round of funding--and set its sights on a big international expansion.
Leading the new funding round was a new investor: Atomic, the venture capital firm founded by Skype co-founder Niklas Zennstrom.
Fab founder and CEO Jason Goldberg said the capital would be used to increase the company's international sales, open two U.S. warehouses in the next six months, and more than double the number of employees over the next two years.
"We're a far cry from an Amazon.com," Goldberg told Inc. "But we think we're on the cusp of something really big, and think it could be big on a global scale."
Goldberg said that not all of that earlier $40 million has been spent, and that he accepted this latest round of investment merely so the company would not have to worry about cash for the near future.
Since the site launched in June 2011--after a highly publicized pivot from its earlier incarnation, a gay social network--Fab.com has added more than 5 million members, Goldberg said. The site sells 3.4 products per minute, he said, adding that he expects the company to generate around $150 million in sales this year.
Betting on Global Growth
Now Goldberg is betting on overseas growth. In February the site purchased Germany-based Casacanda--a site that offered flash sales on high-end, independently made furniture--and began selling outside of the U.S.
Then last month Fab purchased a Llustre, 10-week-old British design store.
Now, Goldberg said, non-U.S. purchases account for 20% of the site's sales.
If the company grows as planned, Goldberg said, he expects Fab to be profitable in the U.S. by as early as 2013 and profitable in Europe a year after.
Focus on Logistics
Goldberg said shortening delivery times will be a point of emphasis going forward, and the company will use some of its new capital to improve its supply chain and logistics.
In August, Fab will open a 300,000-square-foot warehouse in New Jersey and hire 150 workers to handle the location's inventory. Fab plans to open a West Coast location in the following three to six months, Goldberg said, but a location has not been selected.
Such moves will allow Fab to stop using third-party logistics firms to handle delivery planning. Instead, the company will bring all logistics operations in house and use UPS to transport products to customers.
Complementing its capital purchases will be aggressive hiring in the next several years, Goldberg said. Currently, the company has more than 400 employees employees: 200 in New York City, 105 in Berlin, 50 in the U.K., and 65 in India.
The company plans to add around 300 employees in its two new U.S. warehouses, as well as more than 150 technology employees in its India office over the next five years, and approximately double its number of customer operations employees in the U.S. "We expect Fab to be 1,000 employees by 2014," Goldberg said.
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