Hoxton Ventures-backed Fy! has acquired independent boutique marketplace Trouva. It's the third time the startup has changed hands in the past two years after a bruising period for the sector.
Consumer marketplace and ecommerce startups picked up just $9.3bn across Europe in 2023, according to Dealroom — a quarter of the $35.4bn they raised in 2021 and the lowest figure since 2018.
Now, home and living marketplace Fy! has purchased Trouva as it looks to hit profitability this year and mulls further acquisitions.
The financial details of the deal are undisclosed.
The Trouva story
Founded in 2013, Trouva is a marketplace for traditionally offline independent shops and boutiques to sell their wares online.
It’s raised $43.8m, including a $30m Series B in November 2019, from investors including Index Ventures, LocalGlobe and Octopus Ventures.
Since then it’s been a rollercoaster of a ride for the startup. Its first buyer, Made.com, fell into administration in November 2022, just five months after the acquisition, but Trouva wasn’t included in UK retailer Next’s £3.4m rescue deal for the company. Re:store, which is a platform that allows customers to start a video call with a physical store, then acquired Trouva at the start of 2023.
Trouva features items from 7.5k brands and 600 boutiques across the UK, Europe and the US, says Tom Beverley, Fy! cofounder and CEO.
The platform will stay as a separate brand while having Fy!’s AI-enabled search and product recommendation capabilities incorporated into its user experience.
Going for profitability… and growth
Fy! raised £1.5m over the summer to invest in building out those AI capabilities, and launched its AI-powered product recommendations feature in September, which it says has led to a 180% increase in product engagement.
It also launched a ChatGPT-like search function in October, which led to a 45% increase in revenue per searcher, it says.
While both Trouva and Fy! are currently loss-making, Beverley expects the group to hit profitability by Q4 this year.
The downturn has been particularly tough on consumer startups as the cost of living crisis and rising inflation have hit their customers' spending power, but Beverley says that there are signs that’s changing.
“In the US and UK, consumer confidence is improving. Inflation is looking like it's going down and that’ll trickle through to lower interest rates,” he says. “If interest rates go down, people will pay less for mortgages and therefore they’ll have more disposable income.”
Hoxton Ventures — which previously backed Fy! in a £5m round in 2021 — led a “small internal round” into the company in January this year, and the startup now has further acquisitions in mind.
“If you’re a VC-backed business, you don't have good unit economics and the probability of raising new capital is low,” says Beverley. “That presents an opportunity for businesses like ours who are close to profitable.”
The US is a focus for acquisition opportunities, says Beverley. It’s a larger market than Europe and macroeconomic winds are blowing in a more positive direction on the other side of the Atlantic — which are particularly important for consumer businesses.
“The US economy is doing better than the UK economy, and it's certainly doing better than the European economy,” says Beverley.
He's also got one eye on future fundraising opportunities in the US. 40% of Fy! revenue currently comes from the region — alongside 20% of Trouva’s — and there are more VCs out there that can invest growth equity than in Europe, he adds.
