Faire Series G

Sequoia handed Faire a $12.4 billion valuation in May 2022, which is roughly equivalent to saying your friend's Soundcloud rap career is worth the GDP of Monaco because he got 50,000 plays last month. This is a wholesale marketplace—let me repeat that for the venture capitalists in the back huffing their own supply—a *wholesale marketplace* connecting retailers with brands, valued higher than Etsy was at the time, despite Etsy actually turning a profit and Faire bleeding cash like a Renaissance-era physician. The fundamental equation here involves taking a cut of transactions between small businesses, which sounds quaint until you realize the unit economics require both infinite patience and a reality distortion field powered by free money. They're essentially trying to digitize trade show floors, except trade show floors had the decency to charge rent upfront instead of promising inevitable dominance through scale that may or may not materialize before the heat death of the universe.

The timing of this Series G deserves its own Wikipedia page under "examples of hubris." May 2022: the Fed had already started hiking rates, the tech correction was well underway, and anyone with a functioning prefrontal cortex could see the ZIRP party was ending. But sure, let's deploy $400 million into a company that requires sustained cheap capital and consumer spending confidence to justify its existence. Faire's model depends on small retailers having disposable income to stock quirky artisanal products, which works great when everyone's flush with PPP loans and stimulus checks, less great when inflation hits 8% and credit cards start declining. D1 Capital jumping in alongside Sequoia reads less like validation and more like a game of hot potato played by people who've convinced themselves the music will never stop. The macro headwinds weren't subtle—they were screaming directly into these investors' faces while waving red flags fashioned from shredded term sheets.

Let's talk fundamentals, which is apparently optional in venture capital. Faire's growth trajectory looked impressive if you squint and ignore that marketplace dynamics are essentially a race to zero margins refereed by whoever has the deepest pockets. They were reportedly doing hundreds of millions in GMV, which sounds sexy until you remember GMV is fake money—it's what flows *through* your platform, not what you keep. Their actual revenue is a fraction of that, and their path to profitability involves either taking a bigger cut (pissing off both sides of the marketplace) or achieving such massive scale that efficiency kicks in (the same promise every marketplace since eBay has made). Meanwhile, competitors range from Alibaba's various tentacles to Amazon Business to literally every existing wholesale relationship built on decades of handshakes and phone calls. The moat here is allegedly better curation and net payment terms, which is like saying your competitive advantage is being nice and letting people pay later—great until everyone copies it or your balance sheet implodes.

Exit potential from a $12.4 billion valuation in the current environment? I've seen more realistic expectations at a flat-earther convention. The IPO window slammed shut approximately five minutes after this deal closed, and strategic acquirers aren't lining up to pay a premium for a company that needs another billion dollars and five years to maybe achieve profitability. Sequoia's probably planning to hold this in their fund for the next decade, occasionally trotting it out at LP meetings as an example of "building for the long term" which is VC-speak for "please stop asking when we're returning capital." The deal isn't catastrophically stupid—Faire has real revenue, real customers, and a reasonable thesis about digitizing B2B commerce—but it's aggressively overvalued at a comically bad time. Five-point-five feels generous honestly, but I'm accounting for the possibility that inflation runs so hot that $12.4 billion becomes pocket change and this valuation looks prescient in retrospect, which is the kind of galaxy-brained justification that got us here in the first place.