OpenStore provides a unique liquidity solution for Shopify founders by leveraging data science to offer real-time valuations and acquire DTC brands. This episode details their aggressive acquisition strategy, ideal candidate profiles, and long-term vision for growing acquired businesses, offering a compelling look into the evolving e-commerce M&A landscape.
The e-commerce portfolio model has been getting a lot of press of late. And OpenStore thinks it may have cracked the code for finding and acquiring DTC brands. OpenStore launched in 2021, and the idea was the use proprietary technology to suss out which online brands have the most upside. It's raised over $130 million both in venture capital and debt. E-commerce brands can go to OpenStore's website and share their Shopify sales data with the portfolio company. "We've built an engine, powered by data science, that is essentially looking at the historical financials and the order history of the business, and allowing us to come up in relatively real-time with a price for the business, which we then present to the founder," said co-founder Michael Rubenstein. He joined the Modern Retail Podcast this week and spoke about the current state of e-commerce portfolio companies and why he thinks OpenStore is poised for success. According to Rubenstein, OpenStore is focused on aggressively growing its portfolio. Last year, the company said it had ambitions to make an acquisition a day. Rubenstein wouldn't confirm exactly how many purchases this company has made, but said "we have done dozens of acquisitions... We're buying companies very regularly at this point." So what is an ideal candidate for an OpenStore scoop up? According to Rubenstein, it's usually brands whose GMV is between $500,000 and $10 million. He sees OpenStore as a way for serial entrepreneurs who are tired of the current business to make a profitable exit. "They're ready for liquidity -- there's whatever it is that they want to go do next," said Rubenstein. It is, admittedly, a more difficult time for e-commerce businesses than it was a year ago. E-commerce growth is stagnating and inflation is making sales growth difficult for many brands. Still, Rubenstein thinks OpenStore is more than just a business glomming onto a recent bubble. Our plan is to own these businesses, grow these businesses, develop them and