As traditional brands grapple with a new world where selling online is as much or perhaps even more important than how you are positioned in a physical store, a startup that helps them get all their inventory, marketing and selling strategies all on one page has raised a significant round of funding.
Salsify, which provides brands and the companies behind them a single place to track product inventories, manage how they are described and sold across a disparate array of online and offline locations, and then run analytics on the data to figure out what next steps to take, has closed $155 million in a Series E round of financing led by Warburg Pincus, with Matrix, Underscore, Venrock and Greenspring also participating.
Jason Purcell, the CEO who co-founded the company with Jeremy Redburn (chief data officer) and Rob Gonzalez (CMO), said the company would not be disclosing its valuation but only confirmed that it was a “significant up round” compared to Salsify’s valuation in its last fundraise, which was $308 million, according to data from PitchBook.
Prior to today Salsify had raised around $98 million from investors including Underscore, Matrix Partners, Venrock and North Bridge Venture Partners.
The funding is coming on the back of a big 2020 for Salsify, which, like a lot of other companies working in the wider area of e-commerce, has seen strong tailwinds resulting from COVID-19. Specifically, with many continuing to comply with social distancing rules, there has been a big shift for shopping and browsing for goods online.
“Companies realize they need a strong digital footprint,” Purcell said simply in an interview. “Whether it’s Amazon or another marketplace, or their own site, what COVID has done is give many brands a fraction of the thought process: if we don’t have a strong digital footprint, we won’t be able to engage.”
The company is tackling a very fundamental (but I guess “happy”) problem in the world of online commerce. It’s an extremely fragmented landscape, with a huge number of potential ways for a brand to connect with potential customers: their own sites, those of other retailers, larger marketplaces, social channels, direct sales using messaging or email, and much more.
And that’s before you factor in the offline channels that are still very much in use, despite the turn to online shopping for many of us.
This is, in fact, the rationale for the name of the company, too, Purcell told me. The salsify might be known by some as a black root vegetable that looks a bit like a thin white carrot when peeled but with a sweet and mild taste. But it’s also a wildflower that is a bit like a dandelion: it grows everywhere and its blooms spread far and wide, a metaphor for the wide, fragmented world of online commerce. Purcell said he and the founders originally wanted to name the company “Dandelion” but it was taken (indeed, there are a lot of dandelion-themed businesses), so Salsify it was.
The fact that it’s a wide-ranging problem also means that there have been a wide-ranging field of companies that have aimed to tackle it. They include companies like Contently and Sitecore, as well as the likes of Salesforce and Adobe, although Purcell describes his company as “complementary to marketing clouds.” (Notably, it made a big hire from Salesforce two weeks ago: Mike Milburn, formerly Salesforce’s chief customer officer, is now Salsify’s president.)
Salsify counts companies like Coca-Cola, Rubbermaid and Mars among its customers. In all, it has some 800 companies and brands on its books, with 225 of them pulling in more than $1 billion in revenues, and since its last round, a Series D in 2018, the company has seen a boom in business, with a 120%+ net revenue retention rate.
Purcell said that his company plans to use the funding in two main areas. First, it plans to continue expanding its product stack, currently based around the company’s CommerceXM (for “experience management”) platform, which includes features for managing product information, digital assets and managing how products are sold through a brand’s own site, marketplaces, online and offline retailers and social channels and more.
Second, the company has its sights set on expanding internationally. The company is based out of Boston, and a couple of years ago it opened its first international headquarters in Lisbon, Portugal. Right now some 40 of its customers are based overseas, and the plan will be to double down on more expansion both serving them, as well as their U.S. customers abroad, as well as picking up new business.
Purcell also added that the round and the choice of lead investor was very much in line with the company’s ambition to eventually go public.
“This is pointing us on the path to an IPO,” he said. “The intent is to build a company that can operate as a public company. It’s about how we hold ourselves against public companies, while making sure we can operate the same from a growth perspective. Warburg Pincus has taken 150 companies public, and we are building with that in mind.”
Warburg Pincus has been a pretty prolific growth-stage investor whose involvement indeed points not to existing scale and success, but wider ambition. Other companies it has backed include CrowdStrike, Avalara, Samsara, Ant Group, Privitar, Trax and Gojek.
“Salsify is a clear market leader, serving some of the largest and most discerning global brands and retailers. The company’s strong track record, paired with a talented leadership team has positioned it well for the increase in demand for digital shelf solutions,” said Vishnu Menon, managing director, Warburg Pincus, in a statement.
“We are excited to partner with Salsify in their mission to help brands develop better and longer lasting relationships with consumers online,” said Michael Ding, vice president, Warburg Pincus.