Multiple sources have confirmed that Fab is in talks to sell to PCH International for $15 million, in a half cash and half stock deal. Another source put it at possibly as much as $50 million.
Contractual agreements are in the very early stages between the two companies (and these things could always fall apart). However, if it does happen, we’ve been told that some assets will be rolled into Fab founder Jason Goldberg’s new furniture design company Hem and the rest will be taken over by PCH.
Fab was once a Silicon Valley darling. The likely purchase price is a paltry one, compared to the $165 million it raised (at a $1 billion valuation) just over a year ago. The cash remaining from Fab’s fundraising efforts has now been re-channeled into Hem, Goldberg told us in September.
Fab has been operating at break-even and as of this month is cash-flow positive. It’s a big change: in October, Goldberg admitted the company was burning through $14 million a month before its massive round of layoffs in June and the bigger restructuring that led to formation of Hem.
Fab’s been on the market for a couple months, from what we’ve been hearing. This is a relatively recent development, however. Goldberg told TechCrunch back in October that in its early days the company was committed to building the business as a standalone enterprise. “We had an opportunity to sell Fab in the last couple of years, and I said, ‘I didn’t start it to sell it, I started it to build a great e-commerce business.” That effort is now being channeled into Hem.
Fab has seen some drastic changes in its 3 years of operation. It started out as a dating site for the gay community and then relaunched as a flash sale site for home decor. Fab announced just six months after the pivot that it had grown its membership to 2 million, with sales averaging $1.5 million a week. But Goldberg has described the operational and financial challenges of building out a marketplace for third parties to sell their goods on the site. Hem is a shift towards a much small range of products, produced directly by the company itself and sold for a higher margin.
A source close to the company tells us no one really works at Fab anymore. This is relative to the pre-June headcount, however. Goldberg told us in September there are around 25 people working there, and we understand that now the number is around 20.
One could argue that technically most of what Fab was has been rolled into Goldberg’s new venture. He’s now shifted all focus to Hem and has moved to Berlin to manage everything there. Goldberg maintains his CEO title in both Fab and Hem at this time.
We’ll be sure to update you on when and if this deal does go through.
Updated with more detail and pricing information.
Comment