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Daily deal site that's barely gotten started gets blue-chip backers and a $200 million valuation
In Silicon Valley, there seems to be the haves and have nots. There are companies that "have" seriously rich valuations, and those that don't.
For Fab.com, they fall into the "haves" category.
Fab.com, a social-network-for-gay-men-turned-daily-deal-e-commerce site, announced Wednesday that it's raised $40 million in venture financing, led by Andreessen Horowitz. Existing investors such as Menlo Ventures, First Round Capital, Baroda Ventures, SoftTech VC and Ashton Kutcher also participated. As part of the investment, Jeff Jordan of Andreessen Horowitz is joining the board.
The new funding brings the company's total raise to date to $51 million. Its valuation at this round is reported to be $200 million, according to the Wall Street Journal. Fab.com has certainly now become one of the few, but increasing, Web start-ups that have big boots to fill.
The new funding comes amid a big change in Fab.com, which opened its doors in 2010 as a social-network site for gay men. After rebranding as Fab.com in December 2010 and getting an initial round of funding, it wasn't until six months later did Fab.com drop its gay roots and focus primarily on selling stuff to, well, everyone.
To date, it has attracted 1.2 million people, with about 300,000 new members per month in the past two months, as the site has been focused on selling products for significant discounts.
Clearly, this pivot to commerce was the right move if users is any guide. Apparently, Fab.com as a gay social network only attracted 150,000 members, at its peak. Kudos to Jason Goldberg, the founder and CEO for making this change. It's almost not a surprise that he'd make such a bold move. Goldberg is a veteran entrepreneur, having recently sold his last company Socialmedian to Xing for $7.5 million three years ago.
As a flash sales site, Fab.com is doing much better. Fab.com's members have already bought more than half-a-million products. And, in November, the company processed 100,000 orders. Already, the company said it's generating $1.4 mllion in sales a week. While this is gross revenue, it still shows that there's robust sales occurring on the site.
But the challenge for Fab is how quickly and how much it can grow to keep up with the big guys and demands of its VC backers. After all, today, the site is competing with the big giants, like Living Social and Gilt Groupe for high-end designer products. Gilt Groupe has told Vator News that sales in its fiscal year ending July have already reached $500 million.
Much like the other commerce services, Fab.com shows its members an exclusive collection of designs across categories from home products to jewelry to artwork, to toys to outdoor products for big discounts. On Fab.com discounts can be up to 70% off.
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