Quiver Quantitative - Benitago, a significant player among investment groups acquiring businesses selling on Amazon(NASDAQ:AMZN) has declared bankruptcy. This comes less than two years after the New York-based online seller secured $325 million in a funding round. The company, established in 2016, specializes in buying up smaller third-party Amazon sellers, grouping them together to harness enhanced marketing and logistical capabilities. The aggregated businesses, often using Amazon's Fulfillment service, can then negotiate better pricing terms under the umbrella of a single owner.
Marketplace Pulse, an e-commerce research firm, highlighted that over the past four years, aggregators like Benitago amassed over $16 billion in capital, with the surge predominantly occurring in 2021 and 2022. This rise was attributed to the boom in online shopping during the peak of the Covid-19 pandemic. In 2021, Benitago announced a substantial $325 million funding, led by tech venture capital firm CoVenture, following an initial raise of $55 million earlier that year.
However, despite its early promise and success in launching and acquiring multiple brands, Benitago's trajectory mirrors the overall decline in the aggregation market. The fervor for backing aggregators cooled down considerably by mid-2021, with e-commerce demand regressing to pre-pandemic figures. CB Insights, a business analytics firm, revealed in a recent report that funding for Amazon brand acquirers plummeted by 88% last year, and only a handful of funding agreements were reached in the initial five months of the current year. The firm also noted a concerning trend of debt-heavy aggregators potentially jeopardizing their investors.
The bankruptcy filing of Benitago, along with over two dozen of its affiliates, has been consolidated and is now under the jurisdiction of Judge Sean Lane. Attempts to reach Benitago or its legal representatives for comments have so far been unfruitful.
This article was originally published on Quiver Quantitative