Data from Adobe’s Digital Economy Index has recorded a 49% jump in U.S. e-commerce activity in April, compared to a pre-coronavirus baseline. Online grocery sales are driving the majority of the increase, with a 110% boost in sales, while other sectors like electronics saw both an increase in sales (+58%) and price inflation for the first time since 2014. Home and Gardening was another sector that had been in decline since 2014, but has seen a reversal of fortunes in recent months. However, Amazon, who have been criticized for inaction against price increases during the COVID-19 outbreak, this week wrote an open letter to Congress, asking for price gouging during pandemics to be made illegal. In the U.S., 4,000 seller accounts have been suspended by Amazon for policy violations. The company is seeking legal protections to help curb the trend, which seemingly exists across the supply chain, as noted by Amazon’s VP of Public Policy, Brian Huseman, “…any prohibitions should apply to all levels of the supply chain so that retailers and resellers are not forced to bear price gouging increases by manufacturers and suppliers.”
Despite the ongoing pandemic, M&A and fund raising activity remains robust, with several deals announced this week. First, DigitalOcean has raised $50 million in a follow-on raise from existing investors, adding to the 9-figure debt sum raised back in February 2020. This latest round values the business at $1.15bn. With an ARR of $300M, DigitalOcean appears to have grown at a rate of around 20% over the past six months based on TechCrunch estimates. The firm claims they were not “seeking additional funding,” however, investors were keen to provide capital for the next phase of growth, which is soon anticipated based off companies transitioning to the cloud at a faster rate following the COVID-19 outbreak.
Elsewhere, Atlassian acquired Halp, a one-year old startup that facilitates integrated help desk ticketing and automated answers within Slack. Prior to acquisition, Halp raised $2M in seed funding, valuing the business at a $9.5M post-money valuation in April 2019. While Atlassian did not disclose the acquisition price, they did say in their announcement that they will “develop a deeper integration with the Atlassian suite – improving our existing Jira and Confluence integrations and discovering the possibilities of Halp generating alerts in Opsgenie, cards in Trello, and much more.”
Facebook also announced this week that it will acquire Giphy in a $400M deal, with the aim of integrating Giphy within Facebook’s Instagram platform. The acquisition, originally intended to be a partnership, will potentially add millions of new daily users to Facebook’s ecosystem, and at the same time, enhance the functionality for existing users. However, it is unclear as to when the acquisition will complete as Facebook is currently under investigation by federal and state lawmakers for alleged antitrust violations, meaning any deal would likely be heavily scrutinized before closing. Facebook also this week launched Messenger Rooms, a video chat service that can support video calls for up to 50 participants and provides unlimited free call lengths, in a bid to take on Zoom and other popular video chat platforms.
In regulatory news, France’s lower chamber voted in favor of a law against hate speech on online platforms and social networks. Platforms will have up to 24 hours to remove content deemed offensive or considered a crime in the offline world, and violations could see fines of up to $1.36M if the regulations are not followed. In some cases, platforms may only have one hour to act. This mirrors a move seen by the German government, which has fined of up to $60M, and is expected to lead to additional law-making in other EU member states.
In new listings this week, FE International is pleased to announce the listing of a high growth Affiliate business in the Medical CBD Product News & Reviews niche. Boasting over 800,000 visitors over the last 12 months and over $1.3M in revenue, the business has quickly risen in user popularity by providing unbiased and informative product reviews of CBD oil for anxiety, sleep, insomnia, and diabetes. Now ranking for over 27,000 keywords across 145 detailed articles, the business has seen revenue expansion of 38.4% monthly (CMGR) since mid-2019. With diverse earnings across 20 affiliate networks and a lean cost structure, this business should be of high interest to portfolio managers and PEs alike. To request a prospectus, please click the link here.
In events news, SaaStock Remote will kick off its virtual conference on June 10-11, 2020. Join the global community of software as a service (SaaS) founders, executives, and investors for an entirely virtual event. FE founder, Thomas Smale, will be speaking alongside other leaders from Softbank, Drift, and Shopify to help you take your business to the next level. Register here.
FE International continues to offer its full range of M&A services. This includes our new 409A Valuation service for collateralizations, SBA loans, and other business needs.
For more updates throughout the week on the financial world of online business M&A, follow our team on Facebook, LinkedIn, Twitter, and Instagram.
NEW LISTING
E-Commerce – Digital Cartoon Artwork – $5.7M Gross/Yr
- Market-leading brand in the digital portraits & illustrations niche
- Proprietary order management system with an extensive artist network
- High AOV of c.$100
- Wide-market acceptance with thousands of 5-star reviews
- Well-trained team running the day-to-day operations staying on post-sale
Yearly net profit: $1,395,000
Asking price: $4,160,000
SOLD BUSINESSES
SaaS – B2B Shopify Marketing & Advertising Campaigns App – $1.2K MRR
Affiliate/Display Advertising – Pet Food Resource – $17K Gross/Mo