DTC’s Daily Digest brings you the latest news on the world’s fastest growing direct-to-consumer brands. In today’s edition: new DTC holding company targeting home goods; Grab plans third batch of accelerator programme, mulls separate fundraising round for GrabWheels; and bicycle startup Ofo has ‘basically no assets’.
New DTC holding company targeting home goods
Resident, a holding group formed in late May by a selection of individual DTC brands, is exploring the benefits of collective bargaining power in the home goods sector. Mattress brands Nectar Sleep, DreamCloud, Awara, and Level Sleep, all formed by the same founders, along with rug brand Wovenly, have joined forces under the new umbrella company. Subsequently the company has launched a furniture line, Bundle.
The new group mirrors the launch of similar holding companies in the fashion sector such as Assembled Brands, Resonance and Digital Brands Group. These groups are designed so that DTC brands within their collective have higher working capital and stronger access to e-commerce supply chains.
On the importance of each brand maintaining its independent position within the market, Eric Hutchinson, co-founder of Nectar Sleep and Resident, says: “The house of brands approach has long-term power: Five to 10 years down the line, each brand will be anchored in the consumers’ minds as to what they stand for. That creates clarity.”
Grab plans third batch of accelerator programme, mulls separate fundraising round for GrabWheels
Ride-hailing colossus Grab has announced plans for the third batch of its accelerator programme, Grab Ventures Velocity (GVV), which is expected to be launched later this year or early in 2020. While the funded companies have yet to be announced, it is expected that they will all operate in a similar niche, following the funding of a series of firms operating in the food value chain during GVV batch two.
Comments from Grab Ventures’ head Chris Yeo suggest companies funded during batch three will be aligned to their core ride-hailing business: “We are already thinking for batch three, but we have yet to determine the time […] We are yet to set the theme, but we want to empower entrepreneurs that are related to our core business.”
Meanwhile Grab is rumoured to be planning a separate funding round for its e-scooter division GrabWheels. Whilst the company has proved adept at raising funds previously, there are questions on investor appetite for further rounds, particularly given that it has only just announced plans for an additional USD$2bn (£1.59bn) for its main business, following a USD$4.5bn (£3.57bn) round earlier this year.
Bicycle startup Ofo has ‘basically no assets’
Chinese bike-sharing startup Ofo, founded in 2015 and once valued at more than USD$2.2bn (£1.75bn), has ‘basically no assets’, according to the China Securities Journal. As well as no money within banks, the firm has no property or alternative investment assets, meaning it cannot pay back its creditors. This includes 12 million users with deposits totalling approximately USD$170m (£134.9m), along with supplier Tianjin Fuji-Ta Bicycle, which took Ofo to court earlier in the week in an attempt to recover USD$36m (£28.6m).
Questions around the profitability of the firm’s business model, a slowdown in the Chinese economy, and investor hesitation, have collectively hindered the startup, with warnings over the firm’s solidity coming as early as 2017. Even so, offers of USD$1.4bn (£1.11bn) to USD$1.5bn (£1.19bn) were reportedly tabled last year, though these fell through.
Ofo has refused to comment publicly on the news.