When venture capitalist Keith Rabois got into e-commerce, he couldn't stop buying brands. Now, everything must go.
OpenStore, co-founded by Rabois in 2021, is shutting down nearly all of the 40-plus Shopify stores it acquired, and it's in the process of liquidating any remaining inventory by offering steep discounts to move merchandise.
Earlier this week, the company announced it plans to focus solely on growing Jack Archer, the menswear brand it bought for $837,000 in 2022. The website address open.store now redirects to jackarcher.com.
The dramatic downsizing to a single brand comes as OpenStore in recent weeks raised a $15 million funding round that valued the company at just $50 million, a fraction of its previous $1 billion valuation, CNBC has confirmed. Bloomberg previously reported on the financing round and some of the reorganization details.
OpenStore's existing backers include General Catalyst, Lux Capital and Khosla Ventures, where Rabois is a managing director. Rabois didn't respond to requests for comment.
It marks the latest example of the decaying e-commerce aggregator market. Companies in the space took advantage of low interest rates and pandemic-driven growth in online retail to collectively raise more than $16 billion from top names on Wall Street and in Silicon Valley with the intent of rolling up independent sellers on marketplaces like Amazon and Shopify.
Rabois was the No. 1 cheerleader on social media and elsewhere, touting the startup and its Miami headquarters. He posted on Twitter (now X) in April 2021, the "best talent i have ever worked with is joining Openstore." About a year later, Business Insider quoted Rabois in a story saying, "We can absolutely handle acquiring a business in a day," and that "I eventually want to get to one an hour, but that is definitely a challenge."
As recently as June 2024, Rabois shared a post from the company and wrote, "We're hiring! Come learn about the future of commerce online."
By that point, the broader aggregator market was in free fall. Cracks had begun to appear in 2022 as venture funding dried up for cash-burning startups and e-commerce demand cooled with consumers returning to physical stores. Many aggregators struggled to run the brands they acquired profitably, and began selling off assets or merging with rivals to stay afloat.