Behind the Term Sheet: Ghost’s $40M Series C
Founder Q&A with Josh Kaplan & Dee Murthy
Investors: Simon Wu & Brian Schwarzbach; Edits: Jaclyn Hartnett
Last year, we invested in LA-based startup Ghost, leading its $30M Series B. Last week, the company announced a $40M Series C, led by L Catterton — the private equity arm of Louis Vuitton Moët Hennessy and the Arnault family, the leading consumer growth investor with $30B+ AUM (Fortune has the scoop).
Ghost is quietly revolutionizing retail inventory with its B2B marketplace that grants “access to excess” — helping retailers solve the surplus inventory issue in a major way.
Quick Recap:
- Brands face an ‘inventory apocalypse’ — excess inventory is burgeoning
- Why? Supply chain disruptions, unpredictable demand, changing direct-to-consumer advertising dynamics…
- Excess inventory represents $500B in annual sales, expected to grow to $830B by 2030 — $160B of that is destroyed each year
- Now, new pending regulation in Europe will ban the destruction of unsold clothing as part of their Ecodesign framework in the European Green Deal — creating an even larger glut of unsold excess inventory
At Cathay Innovation, we’re thrilled to re-up our support for Ghost in this latest round and welcome L Catterton and the LVMH family to the journey. This is alongside the existing syndicate of top-tier commerce and marketplace VCs like Union Square Ventures (Series A lead), Eniac and Equal Ventures (co-lead Seed investors), FJ Labs and Quantum Light.
A lot has changed over at Ghost, our conviction in the company has not. Rather than taking it from us, let’s catch up with co-founders Josh Kaplan and Dee Murthy on what’s happened over the last year, working with L Catterton and their vision for the future.
FOUNDER Q&A
Ghost Co-CEOs Josh Kaplan & Dee Murthy
CI: Josh and Dee, thanks for taking the time. Been a busy few months for y’all and the team huh?
JK: Well that’s an understatement. We’ve certainly never been busier, but for good reason. The team is scaling, our product is improving significantly and there is more surplus inventory out in the market than ever before.
CI: Congratulations are obviously due for completing a killer Series C with another great new investor. Fundraising is never an easy process, but y’all seem to be a well-oiled machine, having raised a new round essentially every 9–12 months over the last three years. What do you think has allowed Ghost to see so much early success and resonance amongst VCs?
DM: We’ve been very fortunate to work with incredible investors (present company included) that actually understand our business. In each fundraising round, we’ve been optimizing for exactly that — a partner that understands how this industry works and what it will take to get there. We’ve seen a lot of success in proving to those people that we are the right ones for the challenge. We have a large TAM, a clear flywheel, high NPS and great unit economics. Even with all of that, we know how hard it is to succeed in this environment so we are very focused on execution.
CI: One area we’re thrilled to see starting to play out is more brands listing and buying current, wholesale inventory on Ghost. It’s been incredible to see Ghost evolve from being a platform strictly for selling excess inventory to now helping brands sell mainline goods in a wholesale manner to each other. Are there any new or growing areas of the business that you’re particularly proud to see develop since the last round?
JK: That is probably the most exciting area for us as well. We always believed that off-price was the wedge to launch into the market and that if we could be a trusted partner to these brands, that we could offer them distribution for all of their product lines. We are also very excited to share our advancements in data science and AI/ML. Data is the lifeblood of this business and we have made enormous contributions to how we leverage that data.
CI: Part of the growth has to be attributable to bringing in A-team talent to help scale over the past year. It’s been great to see how the mission of the business continues to resonate with not just investors, but current and future employees. Can you share more about how upleveling the team with key functional leaders like head of product, CFO and others has unlocked more leverage for both of you as founders and the company as a whole?
DM: Our team is incredible. Our new functional leaders drive a lot of the company culture and we have seen enormous success in finding leaders that are equally in the weeds as we are. This is a very complex business, and we always say that “Complicated is the Moat”. So we prioritize bringing in leaders that can dive very deep into our business. For example, we recently promoted Marko Vasiljevic to CTO. Early on in his time at Ghost, Marko became the subject matter expert of one of our most popular marketplace distribution partners. He spent dozens of hours watching YouTube videos and reading forums, and speaking with power sellers from that marketplace. His knowledge has unlocked enormous leverage for us by empowering us to focus our efforts on what actually matters for those customers.
CI: How does L Catterton come into play, leading the Series C? What about their team, the fund and their network really made them an attractive firm to partner with on the next stage of Ghost’s journey?
JK: We saw from our Series B with you guys how valuable it is to select a strategic partner in our journey. The L Catterton team was a natural fit for us to lead our Series C with their incredible portfolio of brands and retail relationships worldwide. The deal team truly understands our business, and we’ve welcomed Ian Friedman onto our board with Eric Donado joining as an observer. They offer a unique perspective into the scale required as a growth-stage company and how we can achieve escape velocity. We are thrilled to be working with them.
CI: It’s hard to undersell the potential opportunity of becoming tied into the LVMH ecosystem and we’re similarly excited to see how that develops over time. Flipping the switch, what about Ghost do you think made y’all attractive to the team at L Catterton?
DM: We’ve proven that we can be valuable to a number of their brands whom we already work with, so the deck was stacked from day one. We love working with their brands because the household names tend to perform the best in our marketplace. There is a ton of demand for the world’s best brands on Ghost, so the strategic value is mutual. We are also very grateful that they believe in the concept of Founder Market Fit, and we are uniquely positioned with our past experience to solve the problems that plague the retail industry.
CI: Final question for you: what are you most excited about when you think about the future of Ghost? New products, new partnerships, new inventory types?
JK: We’re most excited about growing beyond the traditional view of surplus inventory and becoming the destination for every product on the planet. We believe that every brand in the world is under-distributed and that we can connect the ecosystem of buyers and sellers to ensure that every product finds a home.
CI: Thanks, as always, for your time!
Interested in joining an all-star team changing the future of commerce in sunny LA? Check out the link below for available positions!
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