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This Singapore startup raised total capital of US$100 million in 18 months

·4-min read
Rainforest, a Singapore-based e-commerce brand aggregator, raised US$45 million in funding in June.
From left: Per-Ola Rost, CTO, JJ Chai, CEO and Jason Tan, CFO (PHOTO: Rainforest)

By Lyn Chan

SINGAPORE — Rainforest, a Singapore-based e-commerce brand aggregator, raised US$45 million in June, taking its total capital to slightly over US$100 million.

The 18-month startup has been snapping up healthy businesses on Amazon, with a focus on the modern-mum category. Acquisitions have been mainly Chinese and Singaporean brands, said JJ Chai, co-founder and chief executive officer.

"We acquire consumer e-commerce brands, providing entrepreneurs with a healthy exit, and we invest in the acquired brands to grow them globally," Chai said.

Earlier this year, the company acquired Millenium Enterprises including its flagship brand Naturebond, one of Singapore’s fastest-growing cross-border baby care brands.

The company was launched in January 2021 by Chai and two other co-founders Jason Tan, who is now chief financial officer (CFO), and Per-Ola Rost, its chief technology officer.

Both Chai and Rost are also familiar with the online marketplace ecosystem. Chai was previously with Carousell and Airbnb, while Rost has managed three Personal Care and Sports & Outdoors brands on Amazon for the past seven years. Tan was the CFO at fintech companies Fave and Ovo.

What is a brand aggregator?

Instead of trying to build new consumer-goods brands from the ground up, brand aggregators swoop up small merchants with a proven track record on Amazon. The Boston-based Thrasio is arguably the leader. Newcomers include SellerX, Heroes and Heyday, from Berlin, London and San Francisco respectively.

The acquired sellers, or roll-ups, gain financial muscle, more extensive marketing and greater bargaining leverage with factories. Overall, they get the help they need to scale up.

Chai stressed the intensive due diligence that goes into each potential purchase.

“A key criterion is the product-market fit — there are mums in the western markets who enjoy the product and it solves a problem for them. We look at product reviews and ratings to determine this. We also prefer brands with a few clear hero products, where a few strong products are distinctive, compared to a large assortment of average products,” he said.

The pandemic accelerated the e-commerce boom but the brand aggregation potential for Rainforest opened even before then.

Within just its first year of operations, Rainforest achieved annualised revenue of US$30 million revenue. He attributed the milestone to the team and the company’s focus on products related to the modern mum.

“To get going in this business, you need to be able to successfully raise capital, acquire quality brands, and drive profitable growth of the acquired brands. Underpinning all those three is quality talent to make it work, especially in the early days when there’s no track record,” he said.

Chai expects the company to reach profitability by year-end.

The company, which currently has 60 employees, aims to continue hiring globally as its portfolio of brands expands.

Chai, a father of three who indulges in Wordle, has also set his sights on more acquisitions with compelling products for mothers. The plan? To deploy more than US$100 million.

“(For brands that) lack the capabilities and capital to take the next step in growth, that’s where Rainforest comes in to provide exit opportunities and grows the brand globally.”

He shares more insight into Rainforest and his advice to marketplace sellers with Yahoo Finance Singapore.

How did Rainforest start?

We noticed the secular trends of micro brands emerging globally from individuals and small teams even. The shifts in manufacturing capabilities – such as leaner production runs – global trade and the ability to reach consumers via e-commerce platforms and new media channels has made it easier to launch your own branded products.

What is the Rainforest business model now?

Rainforest’s brand aggregation is extremely targeted and niche. Since its launch, Rainforest has refined its business model to purely focus on the modern mum industry. The company now looks into innovative, unique product offerings which caters to the mum’s lifestyle.

What lessons have you learnt from establishing Rainforest?

One of the key areas we need to focus on is the development of new versions of our hero products and expanding product offerings over time. This takes time and requires us to stay close to understand our customers.

What guidance would you give to digital sellers who hope to one day exit their brands?

Build a great brand that customers love. It’s easy to say, but it takes a ton of customer empathy, creativity and effort to bring to life.

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