E-commerce marketing platform Yotpo completes $75 million financing round
Despite Covid-19, Israel-based company managed to raise $25 million more than it planned
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Tel Aviv-based marketing service Yotpo Inc. announced on Tuesday that it has completed a $75 million series E financing round led by Adam Fisher of Bessemer Venture Partners. Existing backers Access Industries and Vertex Ventures also took part in the round along with Hanaco Ventures for whom this was the first investment in the company.
Yotpo co-founders Omri Cohen (left) and Tomer Tagrin. Photo: Mor Shani “We embarked on the fundraising round in March, despite Covid-19, as planned,” Cohen told Calcalist. “We raised money in a period of uncertainty. Our second-quarter results look excellent, but we went to market at a time when nearly nobody was conducting deals of this magnitude. One of our investors took the initiative to lead the round and was joined by others. We ended up raising $25 million more than we had initially planned.”
Yotpo was founded in 2011 by Omri Cohen and Tomer Tagrin as a platform for creating consumer reviews and visual content. Today, following two strategic acquisitions, it develops a platform that aids e-commerce websites market their products online, by offering a unique user experience and increasing sales. Among Yotpo’s customers are brands like Patagonia, Bob’s Discount Furniture, Drunk Elephant, MVMT Watches, Gymshark and Rebecca Minkoff. The company employs more than 500 workers in offices in Tel Aviv, Yokneam, New York, London, and Sofia.
Yotpo co-founders Omri Cohen (left) and Tomer Tagrin. Photo: Mor Shani According to company figures, since its last financing round in November 2017, Yotpo experienced a 300% increase in customers and a 250% increase in annual recurring revenue. The company anticipates it will double its income in the next two years because due to the Covid-19 outbreak there has been a significant boost in purchases on e-commerce sites. This has led to marketing executives transferring budgets from offline campaigns to online campaigns, resulting in a large increase in demand for the company's products.
“We are benefitting from a market that is simply exploding: there has been a growth of 30% in nearly all categories, but this is a result of years of investment in the products. Up until 2016 we were active in just one category, user content, and over the last three years, we have been trying to do something bigger and build a marketing platform for e-commerce businesses,” Cohen said.
Yotpo aims to use the new capital to recruit employees and continue acquiring companies, despite the Covid-19 crisis. "Our vision is to build a platform for commerce sites because though each solution exists separately in the market, there is no single platform that unites them synergistically. From the consumer's point of view, if the store you purchase from maintains contact with you through multiple separate solutions, you will have a disjointed experience and that is what Yotpo wants to solve," said Cohen.
Covid-19 may have expedited reliance on e-commerce, but it also run some major brands into the ground. Just this week, for example, we learned about Lord & Taylor’s bankruptcy filing. How do these trends impact you?
“Covid-19 sped up a trend that is a decade old—retailers who are battling for their lives and those who didn’t take the plunge into e-commerce earlier are paying the price. These days we are serving a transaction volume equal to that of ‘Black Friday’ on a daily basis. New brands that were born into the digital age or had already successfully made the transition make up for the retailers who are collapsing,” Cohen said.
“Since our initial investment three years ago Yotpo has significantly increased its bundle of products, taken on larger clients, and invested in recruiting and training quality personnel. Yotpo’s uniqueness rests in its focus on companies that sell directly to clients, while meeting the double challenge of increasing their customers’ sales and maintaining an extraordinary user experience for their shoppers,” said Bessemer Venture Partners’ Adam Fisher. “With a strategy of a variety of products linked to a single source of data, Yotpo is set to lead the e-commerce marketing sector for many years to come.”
