The long-anticipated fire sale of Fab.com has finally happened, putting to rest the roller coaster of a ride for the e-commerce startup that just two years ago was given a $1 billion valuation.
The New York-based startup has sold to PCH, a custom design and manufacturing business that focuses on direct-to-market sale, the company confirmed in a blog post. While specific terms weren’t released, TechCrunch and a few other outlets reported that it’s speculated the company was sold for somewhere above $15 million. That amount, of course, wouldn’t seem low for most startups, but Fab.com was once cast as the next big thing in online flash sales.
When Fab.com joined the startup scene in 2011 as a flash-sale site, analysts anticipated large growth for the e-commerce company after it raised $150 million in a Series D round led by Andreessen Horowitz and Chinese Internet giant Tencent in the years following and got more than $300 in funding. But Fab.com has had struggles since switching strategies. For a once venture-backed company, Fab.com’s story has been a puzzling one in recent years as it slowly lost steam and didn’t amount to its anticipated potential.
Since its inception, Fab has managed to raise $330 million, but has struggled to keep up with its initial potential. Now, Fab will head into the hands of a new company and its 35 employees will join PCH. Its CEO Jason Goldberg, who also founded Jobster, will leave the company. According to The Wall Street Journal, Fab once had 700 employees and was losing $12 million a month. PCH CEO Liam Casey told WSJ the company hopes to transform Fab.com “into a strategic channel — a way to support its community of hardware entrepreneurs, who will be able to showcase and sell their goods on the site.” Casey compared the new Fab.com to a “Netflix for e-commerce.”
“Aside from all the noise, about what the company was and had been, we saw something that really excited us,” he told WSJ.
Goldberg will be focusing his efforts toward Hem — a Berlin-based startup that focuses on home design — the business Goldberg turned parts of Fab into, which will include the company’s latest investments. Hem will use the proceeds of the sale to move the company forward.
“This transaction allows us to focus 100 percent of our resources on Hem,” Goldberg wrote in a blog post that confirmed the deal. “All of the funds raised from that transaction will be reinvested into Hem. The stockholders that originally invested in Fab will continue to hold the same ownership interest in Hem.”
He also shared a few brief thoughts about the future of Hem: “Hem is well financed and on solid ground. We are following a specific plan to create a valuable company that exceeds our customers’ expectations and that all of our our employees and shareholders will all be tremendously proud of for the long term. These are still early days,” Goldberg said.