Vancouver’s e-commerce technology provider Elastic Path raises $43-million
(NOTE: This article first appeared on the Globe and Mail website on June 19th, 2018)
Vancouver e-commerce technology provider Elastic Path Software Inc. is raising $43-million from American and Canadian investors, with plans to expand its footprint in the growing online retail industry.
The company will announce the investment Tuesday, which is led by Palo Alto’s Sageview Capital with contributions from past investors Yaletown Partners and BDC Venture Capital. Including previous fundraising rounds, Elastic Path has raised more than $63-million, the company said.
Elastic Path’s chief executive, Harry Chemko, said in an interview that the new cash will help the company build out its sales and marketing team and partner ecosystem, while a small portion of the funds will be used to buy out early individual shareholders.
The funding, the company hopes, will give it more of an edge in a retail world that could become significantly more frictionless as more devices become digitally connected in the era of the “Internet of Things.”
Crucially, “Generation Z” - generally accepted as people born after 1996 - is expected to account for 40 per cent of all consumers by 2020, according to a recent study by MNI Targeted Media. This digital-first demographic is expected to want seamless retail experiences. And with Elastic Path, Mr. Chemko says, brands can “have dozens or hundreds of different places where you embed commerce in day-to-day interactions you have with brands.”
While the company did not provide revenue figures, Yaletown’s Mike Satterfield said that the financing could help Elastic Path come “within striking reach” of $100-million in annual revenue in just a few years. “It’d be great to have a couple more companies of that scale in Canada − and in Western Canada,” he said.
While Elastic Path regularly helps its enterprise customers build out web stores and mobile commerce products, it’s these many points of contact that the company believes will drive future e-commerce. Mr. Chemko brings up Carnival Corp. & PLC’s “Ocean Medallion” wearable device as a key example of retail’s future potential. Travellers aboard its Princess Cruise Lines division can now carry this small medallion, which allows them to do everything from order drinks to interact with digital boards on the ship to book day trips.
The Vancouver company has also partnered with Tesla Inc. and T-Mobile US Inc. for e-commerce projects. Mr. Chemko believes that, in delivering flexible, context-based retail options, it can stand out in a crowd of large, legacy competitors that work in the large-enterprise space, such as IBM Corp. and Oracle Corp., rather than battle for attention among more nimble competitors enabling commerce in the small- and medium-business market, such as Shopify Inc.
Elastic Path, which has 150 employees today, has “been a few different companies” since first opening in 2000, Mr. Chemko says. He and several co-founders - who’ve since left - struggled to pitch company ideas to investors after the dot-com crash. They eventually bootstrapped Elastic Path as a custom-business-application consulting firm, with help from a $15,000 loan from the young-entrepreneur support network Futurpreneur. After about five years, the company started building e-commerce solutions for clients; a few years after that, Elastic Path was powering the online store for the Vancouver 2010 Olympics.
Mr. Chemko says that the company first tried to expand to its current model of multipoint e-commerce as early as 2012, but was unsuccessful. In the past three or four years, this approach has become increasingly viewed as a major frontier for digital retail.
"It's really a visionary technology and approach to this market,” said Sageview partner Jeff Klemens in an interview.