DTC brand holding company Win Brands Group has kicked off 2022 with a capital infusion and brand acquisition. The company secured $40 million in funding from Orangewood Partners, the company shared with Retail Dive. Win, which has been able to more than double its business in the last four years, had a 440% compounded annual growth rate at the end of last year.

The company plans to use the funds to support its omnichannel platform and grow its portfolio of brands, starting with the acquisition of Love Your Melon.

Love Your Melon, founded in 2012, is a mission-driven outdoors and lifestyle brand, focusing on beanies. Giving back, specifically to those battling pediatric cancer, has remained a key focus of its business.

Brian Keller and Zachary Quinn started the brand when they were sophomores in college as part of a class project. The duo purchased 400 hats with an idea in mind: For every hat sold, the brand would give a hat to a pediatric cancer patient. 

"We really wanted to make a difference in our community in this short period of time that we thought we'd be running the business," Quinn said in an interview with Retail Dive. "After selling out of those 200 hats in two days and giving the other 200 hats away to the local children's hospital," the two saw potential to take the idea further.

The brand in 2015 pivoted from its one-for-one model to giving away 50% of net profit after taxes. Love Your Melon has donated more than $9.4 million to fight pediatric cancer and, with the support of Win Brands Group, expects to reach $10 million given by the end of the year, coinciding with its 10th year in business.

Win Brands Group was impressed with the brand Quinn and Keller built and thought it could benefit from the company's operational model.

"We got to know the founders, Zach and Brian and were really impressed by them personally," Win Brands Group CEO Kyle Widrick said in an interview with Retail Dive. "They've built an incredible business." 

Win Brands is "Shopify-first focused," meaning "we try to find incredible category-leading brands where their main channel of revenue is Shopify," Widrick said. The company then acts to add additional revenue channels, like Amazon and retail, which includes partnerships with retailers like Walmart, Target, Dick's Sporting Goods and Bloomingdale's.

What Win touts is its shared team, which is a central team for all of its brands that covers areas like HR, supply chain, customer service and other operational areas of business. "We have deep expertise in all areas of operations," Widrick added.

Win right now is focusing on a few verticals: home and gifting, which is where its Homesick and Gravity brands fit in, and sports and outdoors, where Qalo and now Love Your Melon fit.

"It's a really incredible product that we feel like, with our shared team, we can continue to really accelerate the growth of the brand," Widrick said.

And the investment from Orangewood, he added, will help Win "to continue to add talent to that shared team that then powers our brands" and move at a faster pace.

Neil Goldfarb, a managing partner with Orangewood, has known about Win Brands for some time and has had a relationship with some of its management team for about 15 years, before Win was even founded.

"We think that this market, in terms of brands being aggregated up with best-in-class knowledge sharing and infrastructure, will be the winner long term in the industry. We truly believe Win can be transformative to the industry," Goldfarb said. "What we're trying to do is bring our operational resources and capital to help accelerate the business so that the company can do more of what they're already doing."

The benefit of holding companies

DTC brands in recent history have often grown and scaled independently. For some this has led to exits, most commonly via merger and acquisition, but public market entrances by way of IPO or more recently de-SPAC transaction have gained steam.

However, for brands that may not yet be ripe for acquisition by a large firm or have the revenue necessary to attract interest in the public markets, an alternative avenue has gained traction in order to help brands scale: holding companies.

In addition to Win Brands Group, companies like Pattern, Harry's Inc. and Very Great have emerged as a way to provide resources and expertise to brands. For Win in particular, its shared team helps alleviate challenges many founders face and the company views itself as very founder-friendly, according to Widrick.

"I have very direct conversations with the founders about their options. I think if they're large enough to eventually go public on their own, that's a great option. I think if they have strategics that are interested in their business, that's a great option," he said. "I think we present a very different, let's say second option, where we come at it from a founder mentality … We understand how challenging it is to build these businesses. And we come at them with a shared team of resources."

By plugging the brands it acquires into its shared team, it frees up founders' time to focus on other aspects of the business like "building great product," Widrick said.

This was a selling point for Love Your Melon's Quinn. Quinn and Keller will remain on as co-CEOs of the brand, and while they don't expect anything to change around Love Your Melon's mission, using Win's shared team means they can focus on areas of the business they otherwise couldn't. 

"We're really excited about actually getting back to focusing on what we're good at, which is the brand and on-the-ground marketing efforts and impact efforts. Because for a few years we got really bogged down in the operations of the business," Quinn said.

The brand expects to bring back in-person events, which have been put on hold for the past two years. The brand is kicking off a "build your own beanie" tour, which allows recipients to customize their beanies from the color of the hat to the pom and patch attached to it. Love Your Melon initially tested it out in Minneapolis and plans to bring it to Boston, New York and Chicago in the back half of 2022.

One thing that differentiates Win Brands Group from other DTC holding companies, like Pattern or Harry's Labs, is that it doesn't incubate brands — and it doesn't intend to going forward.

"We need to have a connection with and really have a lot of respect and confidence in the founders so that they become partners of ours," Widrick said. "That gets us excited for the next chapter of growth for them."

All of the brands Win brings into its portfolio are considered category-leading brands, by the company's standards, and are profitable — something that has seemingly become scarce as more DTC brands enter the public markets.

"Our goal with them is simple: Can we grow your business faster than you would have been able to grow it on your own? And can we make that happen so that your brand is more profitable?" Widrick said.