The Rise of Mobile Shopping and Snapcommerce's Growth

Consumer shopping habits are evolving, with a significant increase in both digital purchases and mobile phone usage for shopping.

This trend is particularly beneficial for mobile-first companies such as Snapcommerce.

Snapcommerce Secures $85 Million in Pre-IPO Funding

Snapcommerce, previously operating as SnapTravel, has successfully raised $85 million in a “Pre-IPO” growth round.

The funds will be utilized to advance the company’s objective of revolutionizing the mobile shopping experience for consumers.

Expanding Beyond Travel: A Platform for Personalized Shopping

Headquartered in Toronto, Ontario, the startup has developed an AI-powered platform.

This platform is designed to be versatile across various consumer sectors, utilizing messaging to personalize shopping and offer competitive pricing.

Initially focused on the travel industry, Snapcommerce is now expanding into other consumer markets, reflected in its recent name change.

Investment Details and Key Backers

The growth round was co-led by Inovia Capital and Lion Capital, with participation from Acrew DCF, Thayer Ventures, and Full In Partners.

Existing investors, including Telstra Ventures and Bee Partners, also contributed to the financing.

This investment brings Snapcommerce’s total funding since its 2016 launch to over $100 million.

A previous $7.2 million round in 2019 included investment from Telstra and NBA star Steph Curry.

Founding Team and Expertise

The company was founded by seasoned tech entrepreneurs Hussein Fazal and Henry Shi.

Hussein Fazal previously led AdParlor to over $100 million in revenue before its sale to AdKnowledge in 2011.

Henry Shi has a background in building platforms like uMentioned and contributed to the launch of YouTube Music Insights at Google.

From Chatbots to a Comprehensive Mobile Shopping Solution

Snapcommerce launched its initial travel-focused product in 2017.

The service utilizes chatbots to engage with customers through messaging apps like SMS, Facebook, and WhatsApp.

Human agents are also available to provide assistance when needed, effectively functioning as on-demand travel consultants.

The platform now supports booking hotels, flights, restaurants, and activities.

Building Customer Loyalty and Achieving Growth

“Our focus has been on building that personal relationship,” stated Fazal.

“Many people end up coming back to us when they travel again.” Over 40% of the company’s 2020 sales were generated by repeat customers.

To date, Snapcommerce has assisted over 10 million users globally, resulting in savings exceeding $75 million.

The company anticipates surpassing $1 billion in total mobile sales this year.

Expanding into General Consumer Goods

The company is now extending its services to help consumers find savings on a wider range of products.

“When shopping, it’s hard to find the right product and even if you do, it’s hard to find a good deal,” Fazal explained.

“On a desktop, there’s ways around it. But on mobile, it’s virtually impossible.”

Profitability and Strategic Reinvestment

Snapcommerce achieved profitability within three months of the pandemic’s onset in 2020.

Sales experienced a 60% increase in the second half of 2020 compared to the same period in 2019.

The company strategically reinvested its profits to fuel continued growth.

“The profitability during the pandemic gave us confidence that we could turn to profitability whenever we needed to and gave us control of our own destiny, which enabled this fundraise,” Fazal shared.

The third quarter of 2020 marked the company’s most successful quarter to date.

Accelerated Growth Driven by the Pandemic

The COVID-19 pandemic significantly accelerated Snapcommerce’s growth as more consumers embraced mobile shopping.

“We believe the next wave of power purchasers will be via mobile,” Fazal said.

“Some of the new generation don’t even have desktops or laptops, and they spend all their time on their mobile phone and messaging. So we’re able to be at the forefront.”

Future Plans: IPO and Revenue Model

Snapcommerce is considering an IPO, although a specific timeline has not been established.

The company has not disclosed its current valuation or precise revenue figures.

Snapcommerce generates revenue by either adding a markup to merchant prices or charging merchants a commission.

Investor Confidence and Vision for the Future of Commerce

Chris Arsenault, partner at Inovia and a lead investor in Snapcommerce, highlighted his firm’s increased investment in the startup.

This decision was based on the company’s success within the travel sector.

“Other companies out there only care about the transaction, and force consumers to look through several services to see if they got the best price, all the while telling them ‘there’s only two seats left,’ ” Arsenault explained.

“We believe that consumers aren’t going to accept that type of pressure-selling in the future. And Snapcommerce’s ability to build trust with its customers and service providers has attracted us to them as they are defining what the future of commerce is going to be like.”

The company intends to utilize the new capital to enhance the mobile search, purchase, and fulfillment process.

The ultimate goal is to make finding “the right item at the right price as easy as sending a message to a trusted friend.”

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