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Just days after the bankruptcy of Thrasio<\/a>, two other significant players in the world of e-commerce aggregators are merging and raising some extra money to shore up their business and double down on a model it still believes has teeth.<\/p>\n Berlin\u2019s Razor Group has acquired U.S.-based Perch, and on top of this it has raised just over $100 million led by Presight Capital with other undisclosed investors participating.<\/p>\n The combined business has an enterprise value of $1.7 billion, the company said, with about $400 million of debt on its books that is not due to come up for payback for at least another four years, from what we understand. (That debt restructuring was part of the new terms of the deal, a source tells us.)<\/p>\n The news is the latest development in a wider consolidation and reordering taking place in the world of e-commerce aggregation. Perch, we have heard from multiple sources, had been looking for a buyer for the better part of a year. Before that it was among those playing consolidator, buying\u00a0Web Deals Direct<\/a>. Razor also has been gradually\u00a0buying up smaller aggregators like Stryze <\/a>and Factory 14<\/a>.\u00a0Others are also on the M&A path<\/a>.<\/p>\n Most immediately, today\u2019s deal comes less than a week after Thrasio filed for Chapter 11 protection, despite having raised some $3 billion in funding to fuel its business buying up and consolidating retailers that sold goods on Amazon\u2019s Marketplace.<\/p>\n According to people close to the deal, Perch and Razor \u2014 despite sharing some common investors with Thrasio, and watching their rival lay off staff and shutter operations \u2014 claim that they were not aware that Thrasio\u2019s troubles would end in bankruptcy.<\/p>\n \u201cI didn\u2019t know the equity investors would actually let it go all the way to Chapter 11,\u201d one source told TechCrunch, citing the billions raised and the value that would get wiped out as a result of the filing. Perch and Razor do happen to have some investors in common, such as Victory Park Capital, which may well have been central to the negotiations between the two.<\/p>\n Investors who had been backing Perch \u2014 they include high profile VCs like SoftBank and Spark Capital, as well as Victory Park \u2014 will own around one-third of the shares in the combined company. Razor\u2019s backers \u2014 which also include L Catterton, BlackRock, Upper90, Global Founders Capital, and dozens of others \u2014 will have two-thirds. Razor\u2019s last valuation, when it raised money about a year ago<\/a>, was $1.2 billion.<\/p>\n The business model behind e-commerce aggregation has always looked strong on paper: there are millions of retailers selling on marketplace\u2019s like Amazon\u2019s, leaning on the e-commerce giant\u2019s storefront, algorithms, and logistics and fulfilment operations. Bringing together the strongest of these would bring better economies of scale to those businesses, and it would open up new avenues for product development, manufacturing and sourcing more information about what consumers actually want to buy and use.<\/p>\n The big problems have been in areas that have always been challenges for any business: how to merge operations in cost-effective ways, and then how to move ahead on single platforms. The big question now is why investors are still willing to back aggregators if so many are proving so hard to operate.<\/p>\n \u201cWe are founder led and that is extremely important, especially with where we are in the cycle,\u201d Tushar Ahluwalia, the CEO and co-founder, told TechCrunch today. \u201cYou just need someone who thinks like a founder, not a mercenary. You need heart and soul. I also think our focus has always been around customers and supply chains that are agile to market needs.\u201d The company, as we\u2019ve described in the past, puts a big focus on technology, and to that it\u2019s now adding that it wants to emulate more of the \u201cC2M\u201d \u2014 consumer to manufacturing \u2014 model that has been built out in Asia by the likes of Shein.<\/p>\n \u201cI think we have certainly worked on it and seen it, we\u2019ve seen the writing on the wall to let us work on the problem from early on and that allows us to be more capital efficient. We are the consolidators,\u201d he added.<\/p>\n He claims that this deal solidifies Razor as the \u201cmarket leader\u201d, and that it is on track for $1 billion in revenues in the next four to eight quarters. It is bottom-line profitable, he added.<\/p>\n<\/p><\/div>\n