What if Shopify Did Invest in Faire? Would it Make Sense?

Shopify continues to lean forward into venture capital as news reports have Shopify having talks (recently?) with Faire. It's unclear if this is ongoing or what, but the thought exercise on what it might mean is interesting.

Here's where it would align:

* Faire is about giving small brands access to small, independent retailers. Very aligned with Shopify's mission of supporting entrepreneurs.

* Faire's valuation (Series G in 2022 as an extension, during boom times, raised $1.4 B) is challenged and Shopify could likely pick it up for much less than Faire has raised if it were willing to play hardball on the valuation (unlike what happened on Flexport, at least from my calculations).

* While there is an integration between Shopify and Faire today, this would ensure that one continued and could perhaps lock out other platforms that had interest.

* A wholesale marketplace is another business model - a matchmaker between retailers and brands. An outright acquisition feels like a stretch, but I don't mind the idea of an investment if it were properly valued.

The big challenge? It's still unclear if Faire is a sustainable enterprise. More on this in a moment.

There is history between Shopify and the wholesale market:

Last time Shopify took a crack at the wholesale market; Shopify quietly acquired a company called Handshake in 2019. At the time, it was rumored they would re-release and do a big splash on the Shopify platform. Many kept waiting for a massive re-launch, but it never seemed to materialize and seemed to be constantly tucked in the background.

Shopify did get a VP of Product out of it, Glen Coates! 😀 Oh yeah, and a New York City office space.

While Handshake was a startup, at this point Faire is definitely not.

The company has raised over $1.4 billion and is estimated to have revenues in the "mid-hundreds of millions" range (not released - but Google whispers). In fact, the company raised a Series G extension of $400 million in May of 2022. I read an article that said they had over 1,100 people at this point (despite layoffs), which would put their burn by my calculations, somewhere just south of $200M a year.

Any of these numbers on their own would put the company in a danger zone. Many brands I speak with say that while Faire is a monster, it is also quite expensive: taking 25% of the first sale, and 15% of subsequent sales. Meaning, it's great to introduce you to people and give a brand their first break, but you don't want to stay there indefinitely.

Still, at the right valuation, this would seem to have at least proper philosophical alignment.