“Don’t believe everything you read on the internet” — you’ve heard it a hundred times before and while it’s mostly true, one company is building back trust on the internet. Yotpo takes the exponential amount of user-generated content (UGC) being created and turning into marketing collateral for businesses. Organizing user generated reviews, Q&As, and photos, the platform introduces social proof into the purchase decision. Optimized for platforms already being used for brand commerce like Facebook, Instagram, and Google, Yotpo automatically publishes the most accurate reviews, in a transparent manner, keeping potential and existing customers happy and engaged.
AlleyWatch caught up with CEO and cofounder Tomer Tagrin to chat about the company, its future plans, and the journey to scaling the business from its launch to its seventh round of funding.
Who were your investors and how much did you raise?
We raised $50M in a Series D round of funding, bringing our total to $101M. The financing round included full participation from existing investors Bessemer Venture Partners, Marker LLC, Vintage Partners, Blumberg Capital, Rhodium and 2B Angels. Vertex Ventures joined the round as a new investor. Daniel Shinar, Access Industries’ Head of Israeli tech investments and ClalTech CEO, will join Yotpo’s Board of Directors.
Yotpo helps brands leverage customer reviews and photos throughout the buyer journey to increase trust, social proof, and sales. With Yotpo, online businesses can collect every type of user-generated content and use it to build a stronger brand and better customer experience.
Partnerships with search and social platforms like Google, Facebook, and Instagram and integrations with HubSpot, Salesforce, and more, mean businesses can improve results from all the channels they’re already using to grow. That’s why the fastest-growing commerce brands use Yotpo, from growing brands like Away Travel, Tile, and Esurance to established enterprises like Staples, GoPro, and Everlast.
What market you are targeting and how big is it?
Yotpo is all about making marketing human. Whether it’s an eCommerce store just starting out, a well-known shopping brand or an online insurance company, any business that can benefit from marketing with their customer voice is a potential Yotpo client.
Yotpo’s sweet spot, or target market, is focused on brand commerce. Meaning that digitally native vertical brands, which are online-first and dominate a niche in their industry are the best fit for Yotpo. Brands like Chubbies, Tile, Burton, Beauty Counter, and more use Yotpo to build a community around their brand based on customer loyalty and feedback to refine shopper experience and strengthen the connection between business and consumer.
What’s your business model?
Yotpo charges an annual subscription fee from customers
What was the funding process like?
It started off very quickly, triggered by strong interest from outside investors. By the time we made the decision to fundraise, we had already had interest in a larger amount than what we set about raising. Eventually it took quite a while to complete, as I had to coordinate with many inside and outside investors, and support all their due diligence processes. I am very happy with the end result.
What are the biggest challenges that you faced while raising capital?
One challenge that surprisingly I rarely faced was to get investors to say yes. Our story really resonates well with investors, and the capital markets are hungry for fast-growth stories like ours. The main challenges were managing a process with a large group of investors, and coming up with a round structure that everyone is happy with. Another challenge we had is that each investor looks at SaaS metrics somewhat differently, so we had to adjust the way we present our numbers over and over again.
What factors about your business led your investors to write the check?
I think they see Yotpo as a huge opportunity since we’re at the intersection of so many tectonic shifts – in SaaS, marketing, and commerce. Our fast growth rate certainly helped them gain confidence that we’ll end up being one of the winners emerging from those changes in the market. Most importantly though, is the connection at the personal level.
How has your role changed within the company as the business has scaled?
At first, I was very much hands-on, writing code, responding to support calls, and of course raising money, which always takes a lot of attention.
As we became a sizeable team, much of my focus was around hiring a management team, growing a NYC-based office that now hosts almost half of our employees, and building a strong culture that will be resilient to fast growth.
Recently, as our management team has become nearly complete, I’ve been focusing on strategy, processes, and culture, which will always be a major focus. Now that there are experienced managers in most functions, my main goal is to ensure that we deploy our resources efficiently into the most promising opportunities, that the entire company works in coordination, and that nothing breaks as we grow further and become more global.
What are the milestones you plan to achieve in the next six months?
Establish our office in Salt Lake City, Utah, hire 50 more employees, and release a new exciting product to the market.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Get your story and culture right. They will attract investors, and give you a chance to attract talent in a competitive market like New York even with limited financial resources.
Where do you see the company going now over the near term?
Build our platform further, to serve more needs of more customers.