In this digital age, if your brand isn’t accessible to consumers online does it even exist? According Scalefast, the answer is most likely no. Scalefast’s end-to-end solution helps mid-to-large enterprise brands create a seamless eCommerce experience and launch DTC operations by providing the complete infrastructure (global payments, fulfillment, tax and fraud management, customer support, compliance with local laws and data protection regulations). Scalefast’s white-label solution can be integrated in less than 15 days and is powerful enough to fulfill 350 orders per second, which means that brands can compete with platforms like Amazon. Scalefast is already powering many global brands including gaming company Sega and L’Oreal.
LA TechWatch caught up with CEO Nicolas Stehlé to learn more about how Scalefast is playing a pivotal role in the retail and commerce revolution, the company’s experience fundraising during a pandemic, and the latest funding round, which brings the total funding raised to $32M across three rounds.
Who were your investors and how much did you raise?
Scalefast raised $22M in a Series B funding round from investment partners Xplorer Capital, Stereo Capital, FJLabs, Benhamou Global Venture, Crédit Mutuel Equity, and Adara Ventures.
Tell us about the product or service Scalefast offers.
Scalefast is the modern way for brands to sell online, empowering them to regain the control and simplicity they need to create an exceptional shopping experience. For enterprise companies looking to increase the performance of their e-commerce channel, Scalefast is the end-to-end e-commerce solution that makes it fast and simple to launch into new global markets or scale Direct-to-Consumer (DTC) almost instantly.
At its core, Scalefast is a next-generation technology platform, built to manage, optimize, and deliver modern delightful e-commerce experiences. Its end-to-end operating partnership, including global merchant-of-record agreements, physical and virtual fulfillment, payment, fraud & tax management, and the full range of finance functions, complement all core channel functions necessary to deliver new revenue fast and without risk.
What inspired the start of Scalefast?
We’re big believers that brands must sell direct to their customers online (i.e, from their own online store) to deliver the brand experience and know customers’ aspirations better, and in 2014, were shocked to see that the vast majority of established brands were massively under-performing from a DTC perspective.
Scalefast was founded in 2014 because my cofounders and I realized that there was a critical gap in the e-commerce world – the Enterprise e-commerce solution market was broken, and even further, commonly considered slow, expensive, and fragmented. Brands looking to reach their consumers directly did not have the appropriate channels, tools, expertise, and infrastructure to do so and were struggling with the high costs and risk associated with building such a direct channel.
The DTC trend was becoming increasingly important, even then, so we set out to create an independent, streamlined e-commerce solution that helped brands reach consumers directly – without the hassle of a third-party – and give them the capabilities to scale globally quickly and efficiently.
How is Scalefast different?
We believe that running an e-commerce business should be seamless, unified, and operated under one roof in order to permit the most agility and responsiveness for brands across the spectrum. The most common mistake brands make is believing that running an online store simply equals having the right e-commerce platform.
However, successful brands know that building, operating, and scaling a direct-to-consumer channel requires so much more than that. Multiple departments need to align with the right infrastructure, expertise, tools, and operations – something that, traditionally, retailers were bringing to the table, not brands.
Scalefast understands that and, in turn, provides everything a brand needs to reach their customers globally – the platform, the DTC infrastructure (such as global payment, fulfillment, tax and fraud management, customer support, compliance with local laws and data protection regulations), and the expertise to operate.
Scalefast has already integrated leading third-party services and technology providers to bring a trusted, best-in-class ecosystem to brands.
What market is Scalefast targeting and how big is it?
Scalefast’s solutions are ideally suited for mid-to-large enterprise brands that are willing to reach their true potential through DTC e-commerce but are struggling with the complexity of global e-commerce. Our addressable market is estimated north from the $100B mark, growing at 15% year over year, in a $2T retail market.
We have a strong portfolio of clients, including Sega, Square Enix, L’Oreal, and FLIR, with target markets including consumer electronics, consumer goods, cosmetics, entertainment, luxury, health, fashion, sports, and toys.
What’s your business model?
At Scalefast, we see ourselves as a true partner and an extension of our clients’ teams – we want to be perfectly aligned with their interests. Therefore, our business model is a revenue share model.
We win when they win, and they benefit from our entire DTC infrastructure right away, without heavy upfront capital expenditures.
How has COVID-19 impacted the business?
The COVID-19 outbreak has impacted e-commerce and retail industries in ways we could’ve never imagined. We saw third parties, like Amazon, struggle to fulfill orders and reach consumers in a timely manner, and brands in desperate need for a direct way to reach their consumers. Because of this, we launched an initiative offering Scalefast’s services to help brands set up and conduct DTC sales quickly and effectively in only 15 days.
This new offering allows mid and large-sized brands to rapidly launch DTC sales through a white-labeled storefront capable of processing more than 350 orders per second. It combines our leading e-commerce platform with our expertise and knowledge navigating the complex DTC landscape, both at the national and international levels.
COVID-19 has accelerated the need for digital transformation, so the e-commerce software industry has generally seen increased demand. For brands selling online, the impact has been extremely dependent on the type of product sold. Some categories, like home goods, have seen a huge increase, whereas categories like outdoor and travel equipment have logically plummeted as stay-at-home orders were implemented around the globe.
What was the funding process like?
Overall, it went smoothly and was accelerated with COVID-19. In our case specifically, we’ve demonstrated strong traction and great execution, and the team is solid and experienced.
Our KPIs and the market trend appealed to many investors so we could focus on managing inbound inquiries. In fact, we were rapidly oversubscribed and were able to focus on the partners who would understand our market, our vision, and aligned with our beliefs.
From the beginning, working with our investors has been a wonderful experience and a great fit. Each team – Xplorer Capital, Stereo Capital, FJLabs, Benhamou Global Venture, Crédit Mutuel Equity, and Adara Ventures – brings something unique to the table, is able to react fast and values the importance of expanding and scaling DTC practices and sales. They understand that with this latest fundraise, we’re able to further validate our modern approach to helping brands expand and scale their direct-to-consumer sales.
In addition, we’re extremely excited to welcome Keith Nilsson, Managing Partner of Xplorer Capital, to our board.
What are the biggest challenges that you faced while raising capital?
Due to the pandemic situation, many investors focused on their existing portfolio of companies to provide much-needed support, prioritizing capital for them. Many investors also decided to postpone their investments considering the economic uncertainty of the pandemic.
Another challenge is that there are significantly fewer tech investors in Los Angeles than in Silicon Valley. However, LA is slowly but surely becoming the Silicon Beach with a broader spectrum of talents, great lifestyle, and creativity. And Sand Hill Road is still about an hour from here!
Another challenge is that there are significantly fewer tech investors in Los Angeles than in Silicon Valley. However, LA is slowly but surely becoming the Silicon Beach with a broader spectrum of talents, great lifestyle, and creativity. And Sand Hill Road is still about an hour from here!
Lastly, meeting with many potential investors can be very time consuming and disturb everyday business operations. Confidential information is shared with investors who can ultimately fund competitors, so it is key to reveal just the right level of information on your strategy and plans.
What factors about your business led your investors to write the check?
Ultimately, what has been financed is Scalefast’s growth. We’ve seen tremendous growth in the past few years, winning every major award, including Red Herring’s 2019 Top 100 North America Award and being named to the Inc. 5000 list of fastest-growing companies and the Deloitte Technology Fast 500.
In addition, Scalefast’s vision about the DTC e-commerce trend, market potential, technology, and product/market fit, as well as our ability to execute, were instrumental in raising successfully.
Our investors believe in Scalefast’s mission to simplify e-commerce for enterprise brands that are looking to deliver the perfect eCommerce experience directly to their customers.
As a leading e-commerce platform across the US and the world, our investors believe in Scalefast, our talented management team, and our unique, streamlined offerings that have allowed us to help brands see success and scale to new heights.
What are the milestones you plan to achieve in the next six months?
We are continuing our plans to expand our team, footprint, and product offerings to further support existing and new customers. We will continue to help brands grow their e-commerce capabilities and presence to not only reach their key consumers but to increase revenues and successes across all channels and markets.
We will continue to invest heavily in what makes our eCommerce technology superior and will work on increasing awareness around our solutions.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
With difficult times ahead, it’s important to try and organize the business to get at least 24 months of cash flow/visibility. While that’s easier said than done, it should be any business owner’s short-term priority.
Where do you see the company going now over the near term?
Our vision has always been that brands should deliver a perfect e-commerce experience directly to the consumer, not intermediaries. As brands have had to adapt quickly to a new reality over the past few months, the need for rapid digital transformation that allows retailers and brands much-needed flexibility to scale has never been more critical.
We are looking forward to continuing to provide the necessary tools for a flawless direct-to-consumer experience unhindered by third parties.
What is your favorite restaurant in LA?
There are so many great restaurants I love in LA! Being a foodie, I enjoy food from all over the world and LA is such a great place for that. One restaurant that has always had a special place in my heart is called Ocean’s Diner in Hermosa Beach. The owners are great people and the food is authentic. Plus, I have many good memories of interviews and meetings I had there.
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