Philadelphia startup Mainfactor secured a $69 million investment to help transform direct-to-consumer companies into powerhouse brands using influencers.
Mainfactor will use the funds to acquire small and midsize businesses and connect them to influencers and celebrities to grow them through creator-driven marketing. The seed round comes from New York-based e-commerce investor Upper90, along with Intermix Founder Khajak Keledijan; Gary Veloric, founder of Red Stripe Plane Group and co-founder of Chesterbrook-based JG Wentworth, and artist Jean Pigozzi.
Mainfactor has a number of companies under agreement that are expected to close soon, CEO Mike Fiebach said.
Mainfactor was founded in March 2020 by Fiebach, Temple University alumna Meredith Franzese and Colby College graduate Jamie Ross. Fiebach, a Philadelphia native, spent time in San Francisco before moving back to the city about a decade ago to build his previous venture — Fame House, a digital marketing and e-commerce company acquired by Universal Music Group in 2016.
The startup is taking a different approach to roll-ups, a multibillion-dollar trend where larger companies buy up smaller e-commerce businesses and combine them into one entity. Several roll-up aggregators on Amazon have raised hundreds of millions of dollars building their portfolios with Amazon retailers.
“We’re on the early curve of the D2C consolidation,” Fiebach said.
Fiebach sees opportunity in pursuing product-based brands that operate on e-commerce platform Shopify rather than Amazon. Mainfactor is primarily looking to acquire retail businesses in verticals like apparel, cosmetics and health and wellness, but it’s also looking at direct-to-consumer service companies, he said. The startup will also connect with influencers and entertainers to get exclusive merchandise rights, on top of digital marketing and collaborations via social media.
Through Fiebach’s work with Fame House and his co-founders’ experience with roll-ups and direct-to-consumer branding, Mainfactor has relationships with manufacturers, marketers and tech companies. The company also has a team that handles shop development, customer service and fulfillment management to optimize outreach on platforms like Facebook, Instagram, TikTok and Google Shopping, he said.
“I think there's a lot of great entrepreneurs that found product market fit, that have a great product, but have hit a ceiling in what they're able to do on their own,” he said. “They can only grow to a certain point.”
The startup aims to give founders an exit that can be a lucrative opportunity while letting the founder stay involved with the company post-acquisition, he said.
Mainfactor is also working on building a technology platform to help cut down on the time it takes to determine a company’s evaluation. The platform would analyze sales figures and other factors through Shopify or Quickbooks to help Mainfactor take out some of the work done to arrive at an evaluation.
“For us, we're trying to move quickly and acquire great businesses at more of a rapid clip than a normal kind of private equity or roll-up would do,” Fiebach said. “The more we can save time to cut down to get to that valuation, the better.”
