The pandemic has led to a profound increase in online consumer spending online with an increase of 52% or $466B between March-September. Yet for startup employees, the uncertainty of the economy can be worrisome. E-commerce transaction marketing platform firm Rokt raised an unexpected Series D round to provide some liquidity to its employees to serve as reassurance and support its growth. Rokt powers the Transaction Moment™ or “AHA-moment” of many large online merchants like Ticketmaster, Fanatics, GoDaddy, and Staples and offers seamless add-on purchases from both the merchant and its own marketplace. While Rokt primarily serves enterprise clients, it recently launched its first Shopify app to serve SMBs. In less than a year, Rokt’s valuation has increased by 42% to $450M+, the company is on track to expand its headcount from 260 to 400 by the end of 2021, and the company’s weekly revenue averages $2-3M per week, back to pre-pandemic levels.
AlleyWatch caught up with CEO and Cofounder Bruce Buchanan to discuss learn more about the motivation for this funding rond, Rokt’s plans to expand into new verticals and markets, and the company’s impressive traction. The company has now raised a total of $162M in funding.
Who were your investors and how much did you raise?
$80M Series D investment. The funding round was led by Rokt’s largest institutional shareholder TDM Growth Partners and supported by other existing investors including Square Peg.
Rokt is the global leader in e-commerce technology, and powers the Transaction Moment™ of best-in-class companies including Expedia, Live Nation, Groupon, Staples, Lands’ End, Fanatics, GoDaddy, Vistaprint, and HelloFresh.
Our platform provides our clients with the tools and the customer knowledge they need to cross-sell and up-sell their own products and services, as well as access to our marketplace of providers, so they can make personalized marketing offers during and after a transaction.
Through our marketplace, we are able to connect different businesses and vendors — ranging from payment, shipping, insurance, loyalty providers to direct-to-consumer brand offers — that would be relevant to each customer in the transaction moment.
Rokt’s proprietary technology enables our e-commerce clients to increase brand engagement, improve customer long-term value, and unlock new revenues — allowing them to stay ahead of their competition while delivering a superior and individualized experience for each customer.
What inspired the start of Rokt?
Prior to cofounding Rokt, I was the CEO of Jetstar. Jetstar is the leading low fares airline in Asia with international and domestic operations in 16 countries across Asia-Pacific. The seed idea for Rokt grew from my time building Jetstar. I identified that taking a consumer on a purchase journey with a personally relevant checkout experience could double the profitability of the airline.
How is Rokt different?
Rokt makes e-commerce smarter, faster, and better.
Smarter: Deliver the most relevant action and experience to each customer
Faster: Rapidly launch, experiment, measure, and iterate to drive faster growth
Better: Realize hidden opportunities in e-commerce through one native experience and integration
We are focused on optimizing e-commerce sites when customers are transacting online – we call this the Transaction Moment.
What market does Rokt target and how big is it?
Rokt targets global e-commerce brands across various industries – including retail, subscription, food delivery, ticketing, entertainment, travel, financial services, and B2B.
What’s your business model?
When helping customers acquire customers, we have a revenue share model. Similar to a credit company, we take a small clip. If we’re helping a client with marketing technology (integrating the right app download campaign etc.), we charge a SaaS fee.
How has COVID-19 impacted the business?
On the client side, we’ve seen both extremes. We have clients that have almost doubled their business and delivered a ton of growth as online transactions have spiked. Clients in retail and subscription particularly have seen massive amounts of growth. However, we also partner with brands in travel and entertainment who have been declining, through no fault of their own. It’s a mixed bag, and we’re committed to helping all of our clients through this however we can.
At the very beginning of the pandemic, we saw transaction volumes drop – but we’ve recently seen that turn around completely and have recently been seeing those numbers rise.
We had average weekly revenues of $2M to $3M pre-pandemic. In March, business in areas such as travel and live entertainment fell sharply, while increasing in categories including food and subscriptions. Revenue has recently rebounded to pre-pandemic levels.
What was the funding process like?
We originally had no intention of a funding round, but at the start of COVID, we had a number of employees come to us with financial worries (partners losing jobs, uncertain about the economy, etc.). Rokt protected all employee jobs through the pandemic, but employees were requesting an opportunity for some additional liquidity at the beginning of the pandemic. This was the catalyst for our funding round. We then asked our existing shareholders – who immediately jumped at the opportunity to purchase more stock. Since our shareholders were already investors, there were no major challenges. In fact, they were very keen to invest further.
We ended up raising $80M through existing investors and didn’t open it to anyone else, since we saw a 42% increase in 2020, we were able to provide liquidity to our employees while also raising capital that we can now use to further grow the business. The catalyst was a human-lead initiative from our staff, which started the discussions and sparked the raise.
What are the milestones you plan to achieve in the next six months?
We will start putting our funding to work by investing in R&D and expanding into new verticals and geographies. Rokt plans to grow from 260 employees today to more than 400 by the end of 2021.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Keep working hard and focus on hiring great people. It’s the team that is the secret to growth and any successful company!
Where do you see the company going now over the near term?
We have plans to grow in four areas:
Firstly, continued growth in our existing business lines – our market share is very small – so there is a lot of room for growth.
Secondly, serving new verticals and geographies. Every year we open up new markets and verticals – expect to see more of this.
Thirdly, serving new customer segments. At the moment we largely focus on enterprise clients. However, we recently launched our first Shopify app to serve SMBs.
At the moment we largely focus on enterprise clients. However, we recently launched our first Shopify app to serve SMBs.
Lastly, a big part of our focus as we work towards delivering our mission is continued product growth. We continue to integrate and solve more and more actions that are relevant to an e-commerce transaction.
What’s your favorite outdoor dining restaurant in NYC?
Terre – a lovely Italian restaurant in Brooklyn, with a beautiful garden for outdoor seating!
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