Recurring revenue is the holy grail for businesses, bringing revenue predictability, deepened customer relationships, and high customer lifetime values. Successfully retaining customers leads to lower acquisition costs in the long term and reduced churn. Given the benefits, SaaS solutions have widely moved to subscription offerings and e-commerce businesses are also jumping in on the trend. The global subscription economy for e-commerce is expected to grow to ~$250B by 2025. ReCharge is a subscription management platform built specifically for e-commerce merchants to capitalize on this growth. Bootstrapped since its founding, the company just raised its first institutional round after growing 91% in 2020. The 15,00+ merchants using Recharge’s checkout solution include some of the fastest-growing e-commerce brands like Hubble, Harry’s, Art of Sport, and Oatly.
LA TechWatch caught up with CEO and Cofounder Oisin O’Connor to more about the experience of initially bootstrapping, the company’s impressive traction, the state of the e-commerce market, recent round of funding, and much, more.
Who were your investors and how much did you raise?
ReCharge has raised $277 million in growth capital from Summit Partners, ICONIQ Growth, and Bain Capital Ventures. Founded in 2014, we self-funded for over five years before accepting outside financing. In addition to the funding news, we announced the appointment of Andrew Collins, Managing Director at Summit Partners to our Board of Directors, and Aaref Hilaly, Partner at Bain Capital Ventures, and Yoonkee Sull, Partner at ICONIQ Growth will join the company as Board Observers.
Tell us about your product or service.
ReCharge is the leading provider of subscription management software for e-commerce. Since 2014, merchants of all sizes have used ReCharge’s billing and payment management solutions to grow their business by increasing customer lifetime value and reducing customer churn. Today, ReCharge powers subscriptions for nearly 20 million subscribers across 15,000 merchants, including fast-growing brands such as Harry’s, Oatly, Fiji Water, Billie, and Native. Though based in Santa Monica, CA, the remote-first company is distributed across 10 countries around the world.
What inspired the start of ReCharge?
In 2014, we started as a small, bootstrapped team looking to solve one of the toughest challenges faced by merchants: a lack of reliable solutions for recurring billing in e-commerce. Most merchants were forced to build their own solution or buy a product that wasn’t meant for physical subscriptions so we decided that we wanted to help create a world where any e-commerce brand could easily create and manage a subscription business. Our most forward-thinking brands challenged us to integrate with best-of-breed e-commerce technologies, introduce tools to improve their customer engagement, build workflows that would grow their revenues, and take an API-first approach to our own product development that would scale as we supported more merchants and subscribers. And today, ReCharge supports over 20 million subscribers across 15,000 merchants.
How is it different?
For the last 5 years, we have been singularly focused on building the best platform to meet the growing needs of merchants, while many others have focused on adjacent use cases, such as B2B billing. We offer a fully-featured product that uniquely enables both the smallest merchants and largest brands to easily adopt and scale with the ReCharge platform.
What market are you targeting and how big is it?
Geographically, much of our business today is based in North America. With the new capital, we are targeting expansion into other geographic markets, specifically Europe. The market is massive — we can help companies of all sizes establish and scale their e-commerce business.
What’s your business model?
ReCharge charges merchants a monthly fee in addition to a small percentage of all transactions processed through the ReCharge checkout.
How has COVID-19 impacted the business?
We saw many brick-and-mortar stores pivot to offer their products through subscriptions as a result of the pandemic. We saw 91% subscriber growth in 2020 across the board in all categories of subscriptions. Certain categories such as Food & Beverage and Pets & Animals were some of the fastest-growing segments in total subscriber count, with 116% and 147% increases, respectively, as non-discretionary spending shifted online. We also saw Beauty & Personal Care subscribers grow by nearly 120%.
What was the funding process like?
We were self-funded for over five years before accepting outside financing, so the funding process was new for our team. We were fortunate that the process was smooth and efficient. Summit Partners, ICONIQ Growth, and Bain Capital Ventures believe in our vision and are great partners. The capital they have provided will accelerate our ability to make payments seamless and enable merchants to build sustainable, growing businesses.
What are the biggest challenges that you faced while raising capital?
We were in a fortunate position to not face significant challenges raising capital. We had interest from several groups and given our track record of bootstrapping and profitability, plus the massive growth of e-commerce, we are an attractive technology business with strong ARR. The entire process took just a couple of weeks.
What factors about your business led your investors to write the check?
Investment firms have been watching the rapid rise of subscription commerce for several years as more merchants have looked for ways to deepen relationships with loyal customers and consumers increasingly have sought out more convenient and flexible ways to buy from their favorite brands. We are the clear leader in powering e-commerce subscriptions and plan to continue to take significant share in a fast-growing market. Outside of our market share, our partners believe in our vision: we are customer-obsessed and have built an amazing product-led business that has experienced hyper-growth with incredible efficiency.
Investment firms have been watching the rapid rise of subscription commerce for several years as more merchants have looked for ways to deepen relationships with loyal customers and consumers increasingly have sought out more convenient and flexible ways to buy from their favorite brands. We are the clear leader in powering e-commerce subscriptions and plan to continue to take significant share in a fast-growing market. Outside of our market share, our partners believe in our vision: we are customer-obsessed and have built an amazing product-led business that has experienced hyper-growth with incredible efficiency.
What are the milestones you plan to achieve in the next six months?
We are looking to scale and expand — our team and our international reach — and to further improve the product for our customers. Over the next six months, we are hiring, for both R&D (engineering, product) and go-to-market functions (sales, marketing, customer success), and seeking creative, ambitious talent that shares our commitment to building great products and delivering an outstanding customer experience.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
We didn’t receive outside capital for our first five years in business. My advice would be to surround yourself with the right people. My cofounder Mike and I were very strategic in hiring like-minded, talented people who shared our vision for e-commerce subscriptions.
Where do you see the company going now over the near term?
This investment will allow us to significantly accelerate our mission of making payments seamless and enabling merchants to build sustainable, growing businesses. Specifically, this means investing heavily in product development, providing our merchants with world-class support, and growing our various go-to-market functions.
What’s your favorite outdoor activity in LA?
Hiking.
