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Saltbox raises $10.6M to help booming e-commerce stores store their goods

E-commerce is booming, but among the biggest challenges for entrepreneurs of online businesses are finding a place to store the items they are selling and dealing with the logistics of operating.

Tyler Scriven, Maxwell Bonnie and Paul D’Arrigo co-founded Saltbox in an effort to solve that problem.

The trio came up with a unique “co-warehousing” model that provides space for small businesses and e-commerce merchants to operate as well as store and ship goods, all under one roof. Beyond the physical offering, Saltbox offers integrated logistics services as well as amenities such as the rental of equipment and packing stations and access to items such as forklifts. There are no leases and tenants have the flexibility to scale up or down based on their needs.

“We’re in that sweet spot between co-working and raw warehouse space,” said CEO Scriven, a former Palantir executive and Techstars managing director.

Saltbox opened its first facility — a 27,000-square-foot location — in its home base of Atlanta in late 2019, filling it within two months. It recently opened its second facility, a 66,000-square-foot location, in the Dallas-Fort Worth area that is currently about 40% occupied. The company plans to end 2021 with eight locations, in particular eyeing the Denver, Seattle and Los Angeles markets. Saltbox has locations slated to come online as large as 110,000 square feet, according to Scriven.

The startup was founded on the premise that the need for “co-warehousing and SMB-centric logistics enablement solutions” has become a major problem for many new businesses that rely on online retail platforms to sell their goods, noted Scriven. Many of those companies are limited to self-storage and mini-warehouse facilities for storing their inventory, which can be expensive and inconvenient. 

Scriven personally met with challenges when starting his own e-commerce business, True Glory Brands, a retailer of multicultural hair and beauty products.

“We became aware of the lack of physical workspace for SMBs engaged in commerce,” Scriven told TechCrunch. “If you are in the market looking for 10,000 square feet of industrial warehouse space, you are effectively pushed to the fringes of the real estate ecosystem and then the entrepreneurial ecosystem at large. This is costing companies in significant but untold ways.”

Now, Saltbox has completed a $10.6 million Series A round of financing led by Palo Alto-based Playground Global that included participation from XYZ Venture Capital and proptech-focused Wilshire Lane Partners in addition to existing backers Village Capital and MetaProp. The company plans to use its new capital primarily to expand into new markets.

The company’s customers are typically SMB e-commerce merchants “generating anywhere from $50,000 to $10 million a year in revenue,” according to Scriven.

He emphasizes that the company’s value prop is “quite different” from a traditional flex office/co-working space.

“Our members are reliant upon us to support critical workflows,” Scriven said. 

Besides e-commerce occupants, many service-based businesses are users of Saltbox’s offering, he said, such as those providing janitorial services or that need space for physical equipment. The company offers all-inclusive pricing models that include access to loading docks and a photography studio, for example, in addition to utilities and Wi-Fi.

Image Credits: Saltbox

Image Credits: Saltbox

The company secures its properties with a mix of buying and leasing by partnering with institutional real estate investors.

“These partners are acquiring assets and in most cases, are funding the entirety of capital improvements by entering into management or revenue share agreements to operate those properties,” Scriven said. He said the model is intentionally different from that of “notable flex space operators.”

“We have obviously followed those stories very closely and done our best to learn from their experiences,” he added. 

Investor Adam Demuyakor, co-founder and managing partner of Wilshire Lane Partners, said his firm was impressed with the company’s ability to “structure excellent real estate deals” to help them continue to expand nationally.

He also believes Saltbox is “extremely well-positioned to help power and enable the next generation of great direct to consumer brands.”

Playground Global General Partner Laurie Yoler said the startup provides a “purpose-built alternative” for small businesses that have been fulfilling orders out of garages and self-storage units.

Saltbox recently hired Zubin Canteenwalla  to serve as its chief operating offer. He joined Saltbox from Industrious, an operator co-working spaces, where he was SVP of Real Estate. Prior to Industrious, he was EVP of Operations at Common, a flexible residential living brand, where he led the property management and community engagement teams.

Goldman Sachs leads $23M in funding for Brazilian e-commerce startup Olist

Olist, a Brazilian e-commerce marketplace integrator, has raised $23 million in a Series D round extension led by new investor Goldman Sachs Asset Management that brings its total Series D financing to $80 million.

Existing backer Redpoint Ventures, which first put money in Olist in 2015, also participated in the latest round. With this latest infusion, Olist has now raised over $126 million since its 2015 inception. This round is reportedly its last before the company plans to go public, according to Bloomberg.

SoftBank led the first tranch of Olist’s Series D in November as well as the company’s $46 million Series C in 2019. Valor Capital, Velt Partners, FJ Labs, Península and angel Kevin Efrusy had previously invested in the first tranche of the Series D.

Olist connects small businesses to larger product marketplaces to help entrepreneurs sell their products to a larger customer base. The company was founded with the mission of helping small merchants gain market share across the country through a SaaS licensing model to small brick and mortar businesses.

As of October 2019, Olist had more than 7,000 customers and used a drop-shipping model to send products directly from stores to clients around the country, allowing them to grow with a capital-light model.

Today, Olist says its platform provides tools that support “all the stages of an e-commerce operation” with the goal of helping merchants see “rapid increases in sales volume.” It currently has about 25,000 merchants on its platform.

The startup is no doubt benefiting from the pandemic-fueled e-commerce boom taking place all over the world as more people have turned to online shopping. Latin America, in general, has been home to increased e-commerce adoption. The region’s $85 billion e-commerce market is growing rapidly with projections of it reaching $116.2 billion in 2023.

Olist says its revenue tripled to a record number in the first quarter of 2021 compared to the previous year, although it did not provide hard figures. It also reportedly doubled revenue in 2020, according to Bloomberg.

Olist Store, the company’s flagship product, gives merchants a way to manage product listings, logistics and store payments. It also offers “a unique sales experience” through channels such as Mercado Livre, B2W and Via Varejo. The product saw a record GMV in the first half of the year, which was up 2.5 times over the same period in the prior year, the company said.

Last year, Olist launched a new product, Olist Shops, giving users the ability to create a virtual showcase “in less than 3 minutes” that also offers payment checkout tools and integration with logistics operators. Shops has interfaces in Portuguese, English, and Spanish, and since its launch, it has attracted more than 200,000 users in 180 countries, according to Olist.

“The pandemic has accelerated digitalizing business processes around the world, thus spurring e-commerce growth in a surprising way,” said Tiago Dalvi, Olist’s founder and CEO, in a written statement. 

The company plans to use its new capital to invest in technology and products, pursuing new mergers and acquisitions and boosting its internationalization process. This is on top of two acquisitions Olist made last year — Clickspace and Pax Logistica, which gave Olist entry into the heated logistics space with more than 4,000 registered drivers.

Specifically, CFO Eduardo Ferraz said the company is in preliminary discussions with ERPs, retailers, and companies with complementary solutions to its own.

“That is why we also decided to expand the investment in our Series D and bring Goldman Sachs as another relevant investor to our cap table,” he said.

David Castelblanco, managing director and head of Latin America Corporate and Growth Equity Investing for the Goldman Sachs Asset Management, said his firm was impressed with how Olist empowers SMBs to generate more revenue.

“Tiago and the Olist team are incredibly customer oriented and have created an innovative technological solution for their e-commerce clients,” he added.

Olist is operating in an increasingly crowded space. In March, we covered São Paulo-based Nuvemshop’s $90 million raise that was led by Silicon Valley venture firm Accel. That company has developed an e-commerce platform that aims to allow SMBs and merchants to connect more directly with their consumers. 

From pickup basketball to market domination: My wild ride with Coupang

A month ago, Coupang arrived on Wall Street with a bang. The South Korean e-commerce giant — buoyed by $12 billion in 2020 revenue — raised $4.55 billion in its IPO and hit a valuation as high as $109 billion. It is the biggest U.S. IPO of the year so far, and the largest from an Asian company since Alibaba’s.

But long before founder Bom Kim rang the bell, I knew him as a fellow founder on the hunt for a good idea. We stayed in touch as he formed his vision for what would become Coupang, and I built it alongside him as an investor and board member.

As a board member, I’ve observed a brief quiet period following the IPO. But now I want to share how exactly our paths intersected, largely because Bom exemplifies what founders should aspire to and should seek: big risks, dogged determination, and obsessive responsiveness to the market.

Bom fearlessly turned down an acquisition offer from then-market-leader Groupon, ferociously learned what he didn’t know, made a daring pivot even after becoming a billion-dollar company, and iteratively built a vision for end-to-end market dominance.

Why I like talking to founders early

In 2008, I met Bom while playing a weekend game of pickup basketball at Stuyvesant High School. We realized we had a mutual acquaintance through my recently-sold startup, Community Connect Inc. He told me about the magazine he had sold and his search for a next move. So we agreed to meet up for lunch and go over some of his ideas.

To be honest, I don’t remember any of those early ideas, probably because they weren’t very good. But I really liked Bom. Even as I was crapping on his ideas, I could tell he was sharp from how he processed my feedback. It was obvious he was super smart and definitely worth keeping in touch with, which we continued to do even after he relocated to go to HBS.

I soon began investing in and incubating businesses, starting mostly with my own capital. When I got a call from an executive recruiter working for a company in Chicago called Groupon — who told me they were at a $50 million run rate in only a few months — I became fascinated with their model and started talking to some of the investors, former employees, and merchants.

Inspired, and as a new parent, I decided to launch a similar daily-deal business for families: Instead of skydiving and go-kart racing, we offered deals on kids’ music classes and birthday party venues. While I was working on this idea, John Ason, an angel investor in Diapers.com, said I should meet with the founder and CEO Marc Lore. By the end of the meeting, Marc and I etched a partnership to launch DoodleDeals.com co-branded with Diapers.com. The first deal did over $70,000 — great start.

I’ve observed a brief quiet period following the IPO. But now I want to share how exactly our paths intersected, largely because Bom exemplifies what founders should aspire to and should seek: big risks, dogged determination, and obsessive responsiveness to the market.

All that time, I kept in touch with Bom. In February 2010, we were catching up over lunch at the Union Square Ippudo, and he asked if I had heard of Buywithme, a Boston-based Groupon clone. He hadn’t yet heard about Groupon, so I explained the business model and shared the numbers. He thought something similar might transfer well to South Korea, where he was born and his parents still lived.

This kind of conversation is exactly why I love working with founders early, even before the idea forms: You learn a lot about them as they explore, wrestle with uncertainty, and eventually build conviction on a business they plan to spend the next decade-plus building. Ultimately, success comes down to founders’ belief in themselves; when you develop the same belief in them as an investor, it is pretty magical. I was starting to really believe in Bom.

The idea gets real — and moves fast

I'm not Korean — I am ethnically Chinese — so Bom put together slides on the Korean market and why it was perfect for the daily-deal model. In short: a very dense population that’s incredibly online.

I’m not Korean — I am ethnically Chinese — so Bom put together slides on the Korean market and why it was perfect for the daily-deal model. In short: a very dense population that’s incredibly online. Image Credits: Ben Sun

I told Bom he should drop out of business school and do this. He said, “You don’t think I can wait until I graduate?” I responded, “No way! It will be over by then!”

First-mover advantage is real in a business like this, and it didn’t take Bom long to see that. He raised a small $1.3 million seed round. I invested, joined the board. Because of my knowledge of the deals market and my entrepreneurial experience, Bom asked me to get hands-on in Korea — not at all typical for an investor or even a board member, but I think of myself as a builder and not just a backer, and this is how I wanted to operate as an investor.

Once he realized time was of the essence, Bom was heads down. For context, he was engaged to his longtime girlfriend, Nancy, who also went to Harvard undergrad and was a successful lawyer. Imagine telling your fiancée, “Honey, I am dropping out of business school, moving to Korea to start a company. I will be back for the wedding. Not sure if I will ever be coming back to the U.S.”

I emailed Bom, saying: “Bom — honestly as a friend. Enjoy your wedding. It is a real blessing that your fiancée is being so supportive of you doing this. Launching a site a few weeks before the wedding is going to be way too distracting and she won’t feel like your heart is in it. Launching a few weeks later is not going to make or break this business. Trust me.”

Bom didn’t listen. He launched Coupang in August 2010, two weeks before the wedding. He flew back to Boston, got married, and — running on basically no sleep — sneaked out for a 20-minute nap in the middle of his reception. Right after the wedding, he flew back to Seoul. Nancy has to be one of the most supportive and understanding partners I have ever seen. They are now married and have two kids.

Jumping on new distribution, turning down an acquisition offer