Recharge Raises $227M: From Bootstrap to $2.1B Valuation
ReCharge Secures $227 Million in Series B Funding
ReCharge, a leading provider of subscription management software tailored for the e-commerce sector, has announced the successful completion of a $227 million Series B funding round. This investment results in a company valuation of $2.1 billion.
Investment Details
The funding was led by Summit Partners, ICONIQ Growth, and Bain Capital Ventures. These firms contributed the capital to fuel ReCharge’s continued expansion.
Prior to this, ReCharge operated on a bootstrapped model for several years. In January 2020, the company secured a previously undisclosed $50 million Series A investment from Summit Partners. Currently, ReCharge maintains a cash flow positive status, as confirmed by company executives.
Platform Evolution and Growth
Initially focused on subscription billing and payment processing, ReCharge’s Software-as-a-Service (SaaS) platform has broadened its capabilities. It now offers a comprehensive suite of tools designed to enhance revenue generation and reduce operational expenses for e-commerce businesses.
The software empowers e-commerce merchants to implement and manage subscriptions for tangible goods. It specifically targets direct-to-consumer (DTC) brands, facilitating the addition of subscription options to their offerings. The ultimate goal is to convert one-time buyers into consistently returning customers.
ReCharge has demonstrated significant growth, partly attributed to the accelerated shift towards digital commerce during the COVID-19 pandemic. According to co-founder and CEO Oisin O’Connor, the company’s Annual Recurring Revenue (ARR) increased by 146% in 2020, with overall revenue growth exceeding 136% during the same timeframe.
Currently, the platform supports 15,000 customers and manages 20 million subscribers across 180 countries. Notable clients include Harry’s, Oatly, Fiji Water, Billie, and Native.
Even before the pandemic, ReCharge experienced consistent annual doubling of its transaction volume. Since its founding in 2014, the company has processed over $5.3 billion in transactions.
Company Expansion
ReCharge’s employee base has grown to 328, an increase from 140 in January 2020, reflecting the company’s rapid expansion.
Oisin O’Connor noted a surge in brick-and-mortar businesses, like Oatly, adopting subscription models in response to the pandemic. Food & beverage and pet food categories experienced particularly strong subscriber growth, with increases of 100% and 147% respectively, as consumer spending shifted online.
Surprisingly, growth extended beyond these core categories. Subscribers to beauty care products increased by 120% in the past year.
“In 2020, we observed a 91% overall increase in subscriber numbers across all subscription categories,” O’Connor stated. “This growth is driven by a combination of factors: the pandemic, the increasing popularity of physical product subscriptions, and the rise of direct-to-consumer purchasing.”
Future Plans
The newly acquired capital will be allocated to accelerate hiring in key areas, including Research and Development (R&D) – encompassing engineering and product development – and go-to-market functions like sales, marketing, and customer success.
ReCharge intends to expand its integration with additional e-commerce platforms, such as BigCommerce, Salesforce Commerce Cloud, and Magento. Geographic expansion, beginning with Europe, is also planned.
Furthermore, the company aims to broaden its acquisition strategy to expedite market entry into specific domains and enhance its existing products and services.
Investor Perspectives
Yoonkee Sull, a partner at ICONIQ Growth, highlighted his firm’s long-term observation of the burgeoning subscription commerce landscape. He noted the increasing desire of merchants to cultivate stronger customer relationships and the growing consumer preference for convenient and flexible purchasing options.
ICONIQ’s investment is based on the conviction that ReCharge will continue to capture a significant share of this rapidly expanding market.
Sull emphasized the ReCharge team’s early recognition of the subscription e-commerce opportunity and their development of a comprehensive product that caters to the diverse needs of both small and large merchants, enabling them to easily adopt and scale subscription models.
Andrew Collins, managing director at Summit Partners, commended the company’s ability to achieve substantial growth without relying on external funding for an extended period, attributing this success to its operational efficiency and disciplined approach.
“The ReCharge team successfully identified a strong product-market fit and created a product that resonates with customers, fostering robust organic growth as the business scales,” Collins concluded.