

How Fab Raised $40 million with a lot of data and not much pain - betashop
http://betashop.com/post/14249821547/behind-the-scenes-how-fab-raised-40-million-with-a

======
vm
This approach works brilliantly if:

1\. You trust your potential investors. Curate your shortlist through your
network and aim for the best of the bunch. Emphasize your network's
recommendations rather than chasing name-brands.

2\. You have real data. Most applicable for growth rounds. Doesn't apply to
most seed / Series A rounds unless you're really kicking ass early

And you will not find a VC who wouldn't be thrilled to hear of this approach.
Saves time and adds extra depth to those in-person discussions.

------
aresant
If you've got incredible data, by all means sell with it.

But FAB.com was never going to have to "go through the typical dog and pony
show"

They're crazy hot.

There's "no doubt that [they'll] hit $100M in revenue fairly soon"

Remember the story about Zuck showing up in a bathrobe?

When you're the hot chick, you don't have to play by any rules.

~~~
lusr
What is Fab.com? The article didn't explain and the site is apparently by
invitation only.

~~~
chris11
It looks like another site selling designer goods on sale. I signed up with a
disposable email, but I was not immediately given an invite. I was shown
upcoming sales though.
[http://www.samplesalesites.com/2011/12/thursday-1215-online-...](http://www.samplesalesites.com/2011/12/thursday-1215-online-
sample-sales-invites-marc-jacobs-rebecca-minkoff-bcbgmaxazria/) has a list of
upcoming sales.

For example they will have a designer clock for sale later.
<http://diamantinidomeniconi.it/clocks/Plex-Led>

I'm sure there is a market for the site, but I'm definitely not in it.

~~~
noodle
Not exactly. It isn't like a Gilt or whatever. Its closer to an Ikea. Most of
its products are small, not too expensive, and not clothes or furniture. Their
schtick is, as it said in the article, design. Example: they were selling
these for like $6 <http://helveticards.uberdm.com/>

------
AznHisoka
$100 million in revenue... did they calculate that using Groupon accounting?
meaning the retail price counts as revenue, even though it's sold at 50-70%
off? And if they're selling stuff for other companies, then isn't the
commission just the revenue, nothing more? I can't help but wonder if these
numbers they quote are just greatly exaggerated.. I mean, they barely have a
million members right now, and they can't all be buying stuff everyday.

~~~
brown9-2
I'm not sure if they are counting the retail price as revenue instead of the
price they sell to their customer at. Where do you get this impression from?

------
jscheel
I've been on Fab for a while now. I love the site, and have purchased a few
things from it. That said, it's still a niche site. I'm a little confused as
to how they are going to use a $40 million dollar investment. Is this to give
them the ability to buy better deals from suppliers?

------
nodesocket
Looking at RJ Metrics, $500/Mo for their cheapest plan is bit pricey.

~~~
maaku
Crazy expensive for a small startup. But the OP is an investor in RJ Metrics,
so of course it's the bee's knees to him.

------
bprater
The Fab mobile app is pretty sexy on iOS. I haven't seen many apps that get me
excited about mobile shopping, but this one always has me giddy about what
cool items they'll dig up next.

------
jaequery
can someone please answer me why companies like this need to raise money? when
they were already on a run-rate to hit $100MM? soon?

~~~
earbitscom
They're going to hit $100M in revenue; that's not profit. Their margins at
their current size might be low. If they want to grow to $400M in a couple
years, they have to spend a lot of money quickly. Particularly if they have
low customer acquisition costs, but it takes 2 years to realize the full
lifetime value of the customer, they would be foolish to wait for the money to
come in via profits.

In addition to needing more money to grow quickly, you don't want to
underestimate the power of having Andreesen Horowitz or any strong investor in
your corner. Look at YC, for example. $20k is nothing compared to the real
value they generate through their connections and other benefits. Top tier VCs
are the same - providing connections, advice, guidance, keeping you focused,
and helping you navigate things in the future like more funding, an IPO, etc.,
things they've done many, many times, and perhaps Fab's founders never have.

------
jayzee
anybody else use RJ Metrics? Any thoughts?

~~~
vm
Test RJ Metrics, Mixpanel and KISSMetrics for your web apps. Lots of small
nuances in all three. RJ tends to be strongest in ecommerce in particular

------
whycombine
By just throwing the RJ Metrics data at the VC's like that, aren't you asking
them to do a lot of extra work that they shouldn't have to?

Wouldn't it be better to prepare some sort of story for you data, present that
to them, then say, "Don't just take our word for it, take a look at the data
for yourselves"? That way, they're sure not to miss the major components that
differentiate your company.

(I obviously am no expert on this.)

~~~
mikeryan
If you are a startup with close to $100M in revenues in someways you want the
investors who are willing to do the work themselves. Early stage companies
need to sell a story. More established ones want investors who understand the
story they are already telling.

This advice is solid but I'd think that there are very few companies which it
fits.

~~~
vm
Data speaks volumes at any stage. Fab is an extreme example though stating key
metrics upfront goes a long way in capturing interest. If you're looking for a
seed round to build metrics, at least show that you know which metrics to
optimize and that you have a detailed plan on how to test & refine them

