Together with this funding amount, its previous three seed rounds add up to $4.6 million. Redmart will also raise its next round before the year is up, said Egan.
When asked why it plans to do so so soon, rather than wait to close a bigger round this time, he said: “We believe we can increase our valuation a lot in the next six months, so we didn’t want to raise too much right now.” He said Redmart’s tech team just updated its e-commerce platform and warehouse management system, and has rolled out an iPhone app.
“We believe these improvements will have a significant impact on our valuation in a bigger round,” he said.
Its Series A is likely to be about $3 million, going by reports which have estimated previous funding at $1.29 million. This round was led by Singapore-based gaming firm, Garena. Skype co-founder Toivo Annus participated in two of the seed rounds, and in the Series A said Egan. Previous rounds also included Golden Gate Ventures and East Ventures.
Unlike many startups coming out of the island nation, this Series A won’t go towards expanding out of the country to neighbors in Southeast Asia. “I know Singapore is a small market, so most startups want to expand out, first thing. But for fast-moving goods, it’s a $5.2 billion market in Singapore alone,” said Egan.
By fast-moving goods, he means groceries and sundries. The two-year-old company just did $5 million in annual sales, and customer retention rates are “high”, with users returning 1.5 times a month on average to make purchases, he said. Redmart stocks about 8,000 products on its site.
Users who spend more than $59 (S$75) per basket get shipping free, so it’s likely that each order exceeds that amount. He wouldn’t state how many active users Redmart has, but said it has about 10,000 registered users in its database.
Redmart carries commonly-found brands like Nestle and Kellogg’s in its grocery section, as well as Dettol and Fab in household cleaning sundries. Egan said its first big agreement was with Unilever, which owns brands like Dove, Lipton and Ben & Jerry’s. “After Unilever signed up, it was easy to get other brands on board,” he said.
Egan plans to use the company’s new funding injection to continue work on its logistics software. It built its warehousing management and transportation software in-house, and its 11 vans are outfitted with Android-based devices that do delivery route optimization and communicate with the warehouse.
“We had to build the logistics software ourselves because our typical basket size is about 30 items. A fashion store like Zalora might have an average basket of one or two items. Packing and transportation can be a real challenge at larger scale,” said Egan.
Redmart has about 25 people working in its office, and 50 in its warehouse. It just announced a set of hires this month: Tim Klem, who used to be the product manager of logistics at ’90s dotcom Webvan (which went bankrupt in 2001); Trudy Fawcett, who was a buyer at Sainsburys supermarkets in the UK, and Howie Chang, who was head of UX and design at Andreessen Horowitz-funded startup Viki.
Last year, Redmart hired Todd Kurie, former marketing director at eBay, as its vice president for marketing.
“We were lucky to have these people in Singapore already,” said Egan. Klem was at SAP and Curie was at social media startup MyCube before they joined Redmart.
Egan founded Redmart together with Vikram Rupani, that he met during the MBA program at INSEAD Singapore.