Sunday, December 21, 2014

Kynetic's Fanatics raises $150M from Andreessen, Insight

Will add warehouses; implies $1.5 billion value for growing $800M (yearly sales) firm

Kynetic's Fanatics raises $150M from Andreessen, Insight

Fanatics Inc., the $800 million (estimated 2012 sales) sports-apparel arm of Michael G. Rubin's Conshohocken-based online retail holding company Kynetic, says it has raised $150 million from venture investors Insight Venture Partners and Andreessen Horowitz, plus a $75 milllion line of credit for future expansion, in connection with its planned acquisition of Florida-based rival Dreams Inc., which closed today, Fanatics president Jamie Davis told me.

This sale of a 10 percent stake in Fanatics implies a value for the company of $1.5 billion.

Andreessen Horowitz is a venture capital firm created by Netscape co-founder Marc Andreessen and Opsware co-founder Ben Horowitz.

"We've invested a ton in our infrastructure, our technology and our investory," said Davis. Among other planned additions: new "fulfillment and regional distribution centers" in other parts of the U.S., added to Jacksonville-based Fanatics' existing Kentucky warehouse, which employs up to 3,000 during its pre-Christmas peak sales season. 

"Ecommerce is usually disruptive" to retailers, but Fanatics has been able to grow, Davis added, by supplying NFL, Major League Baseball, NBA, Nascar and other team-brand sports clothing, thorugh CBS, ESPN, NBC and other Web sports partners, to fans who have relocated far from their colleges or home-team cities and are typically unable to buy fan items in local shops.

As a result, "licensed sports is the only category that's growing because of the Internet," said Davis, a Chicago native who jonesed for Cubs gear during his years as a Comcast executive. He met Rubin at an NHL playoff game between his beloved Black Hawks and Comcast-Specacor's Flyers, leading him to the Fanatics post after a long, multinational TV management career.

"It's a hard business," Davis added. "We have to have something for everybody. We will keep, in peak times, over 1 million items in stock, with a retail value close to half a billion dollars. The Internet has made that available. And this is still in growth mode." 

Joseph N. DiStefano
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PhillyDeals posts raw drafts and updates of Joseph N. DiStefano's columns and stories about Philly-area finance, investment, commercial real estate, tech, hiring and public spending, which he's been writing since 1989, mostly for the Philadelphia Inquirer.

DiStefano studied economics, history and a little engineering at Penn, taught writing at St. Joe's, and has written the book Comcasted, more than a thousand columns, and thousands of articles, and raised six children with his wife, who is a saint.

Reach Joseph N. at or 215 854 5194.

Joseph N. DiStefano
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