Shop Talk

Retailers, consumers and prices

Mission possible

October 5, 2009

Securing financing from a private equity company in the current environment may seem to many like trying to get blood from a stone.  Not so to Christian Heitmeyer.

The 43-year-old entrepreneur founded brands4friends two years ago and it has since become Germany’s largest online shopping club.

eurosHeitmeyer has pencilled in sales of 85 million euros ($124.3 million) for this year — more than three times as much as last year.  Finding investors seems to be the least of his problems.

Private equity companies were calling him rather than the other way around, he said. “There’s not one week where there isn’t another one calling up,” Heitmeyer said.

“There aren’t that many healthy companies around and there is a certain pressure to invest. We are benefitting from that.”

Brands4friends has so far gotten most of its financial support from venture capital firms like Partech International, Mangrove Capital Partners and Holtzbrinck Ventures.

For the next financing round early next year, Chief Executive Heitmeyer wants to get private equity on board, aiming to raise a clear double-digit million euro sum.

Heitmeyer’s idea of selling clothes, accessories, and other lifestyle products by fashionable brands in Germany to an exclusive online audience for a steep discount (similar to France’s vente-privee.com) came at the right time.

The number of bargain hunters swelled as the global economy fell into recession and companies were grateful to hive off ballooning inventories to distributors like bransds4friends.  A growing online community began bidding for selected products from brands like Nike, Puma, Reebok, Oakley, or Eastpak for discounts of up to 70 percent.

Today brands4friends has more than two million members in Germany — up to 120,000 new members sign up per month, also hepled by its link-up to the German social networking site StudiVZ, which is owned by Holtzbrinck.

Heitmeyer aims to launch its first expansion abroad later this year and is in talks for a possible joint venture with another e-commerce company to enter the U.S. market, potentially in the next three years.

Over the mid to long term, however, brands4friends may have draw funds for its expansion elsewhere.  Heitmeyer is already toying with the idea of tapping the stock market.  So, far no date has been set, he said.

    ($1=.6839 Euro)

(Reuters photo)

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