Billion-Dollar Startup Club About To Get Fab?

After starting as a gay social network, Fab Inc. changed its business strategy two years ago, entering the already crowded daily deals fray as a go-to discount outlet for retailers selling a wide variety of niche products that regularly include art, furniture and jewelry.

But this repositioning may be set to pay off for the company, as The Wall Street Journal indicates the online retailer is in talks to raise as much as $300 million from a new round of venture capital funding, one that could lead the company to a billion-dollar valuation, according to the media outlet’s sources.

While specifics regarding Fab’s backroom maneuvering haven’t been fully disclosed, the Journal says a funding agreement could be finalized by mid-June. Those familiar with the negotiations say London-based international venture capital firm Atomico is expected to lead the round, but the company did not respond to the news network’s requests for comment.

Atomico led Fab’s most recent round of funding, which ended last July and saw the company reach a $600 million valuation.

According to the Journal, Fab initially sought to raise an additional $150-$200 million from this current round, but sources say that these expectations have proven modest.

“The commitments were for more than $375 million, one of the people said,” the news outlet reports.

While Fab originally forecasted that it would become profitable sometime this year in the United States and next year in Europe, the Journal indicates it is pushing back on these promises. The main goal of the emerging eCommerce giant is to increase its exposure, and this includes making large expenses like marketing to new customers, shipping orders and paying overhead.

The Journal says its sources expect Fab to revise its expectations for profitability in light of this strategic adjustment, delaying plans to move into the black until the end of 2014.

Read the full report here.

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