Dianthus eyes buys as it raises Series A
Dianthus, an AI-fueled e-commerce platform, is eyeing more acquisitions of digitally native brands this year as it nears the close of a Series A round, CEO Chris Litster tells Axios.
Driving the news: Most tech companies aim to sell their solutions to clients, but Dianthus is buying these businesses instead to better control the data, Litster says.
Details: Litster did not disclose the exact size of the Series A, but he confirmed the round will be larger than the $11.5 million seed round Dianthus announced in March, led by PJC, Underscore VC and angel investor Jason Calacanis.
- The company previously secured a $22 million line of credit, which this new funding will increase the availability of.
By the numbers: Fresh funds will finance acquisitions in pet, home, beauty and sports/active lifestyle, he says.
- Ideal targets generate between $2 million and $20 million in revenue and are EBITDA-positive (no distressed companies).
- Valuation multiples for prospective targets have ranged between 4.5x and 5x EBITDA and in some cases even 4x EBITDA — compared with between 5x and 5.5x earlier this year.
- In the second half of this year, Dianthus plans to acquire at least one and maybe as many as four more brands.
Flashback: Dianthus' first acquisition in January was of Cuddle Clones, which makes plush toy replicas of your pet and generated $15 million in revenue, Litster says.
- Under Dianthus, this year, Cuddle Clones projects $26 million in revenue.
- Dianthus recently acquired AirKayaks in addition to I Made Bogey, Litster says.
Yes and: Dianthus is looking for brands that have historically relied on customer acquisition growth by placing ads on Facebook.
- "That channel went bump in the night due to privacy changes," Litster says, referring to a privacy change Apple made last year that heavily impacted Facebook's sales.
- That could include expansion to channels such as Instagram, TikTok, and tried and true email marketing.
The bottom line: Dianthus wants to buy brands and accelerate their top-line and EBITDA growth through subject matter experts, as well as applying Dianthus’ AI and machine-learning tools.
- Eventually, the company seeks to bolster its acquisitions in their fulfillment and operations functions.