Ecwid, a Shopify-style e-commerce platform company, has raised a $42 million round from Morgan Stanley and PeakSpan after seeing exponential growth during the COVID-19 crisis.
Initially Founded in Russia
The San Diego-based startup previous raised about $6.5 million back in 2009, initially founded in Russia as a spinoff of X-Cart, a previous company founded by the founder and CEO Ruslan Fazylev.
The new funding will be used to cash out existing investors Runa Capital Latvia and the IT-park business incubator. The company also will use it to fuel acquisitions and to continue expanding its platform.
Ecwid competes in the vertical alongside the likes of Shopify, BigCommerce and WooCommerce, which have capitalized on growth of online shopping over the last decade by helping small and medium brick-and-mortar business establish an online presence.
Affordability and Ease of Use
New users are attracted to Ecwid because of its affordability and ease of use, Fazylev said. Its pricing starts at freemium which allows a website to sell up to 10 products.
Further priced tiers include the ability to integrate with Facebook and other sites, as well as sell more items, and apply more analytics among other features.
“In the beginning, we made the first version of Ecwid available completely free, and added paid premium additions later on,” Fazylev, founder and CEO of Ecwid said. “We wanted to make commerce, as easy as possible for SMBs removing the need to hire a web agency, consultant or anyone to run their online shop.”
The coronavirus outbreak caused millions of SMBs to temporarily close down their physical establishments, accelerating the adoption of next generation online shopping.
Surge of New Users
As a result, Ecwid has seen a surge of new users, with transaction volume between March and April growing by 50 percent, according to the company.
“Overnight, demand tripled because SMBs were under immense pressure to transition to online ordering. At Ecwid we are not worried about the Walmarts of the world but about the small guys and making it super easy for them,” Fazlyev said.
Overall, merchants have been receptive to change as the crisis has spurred innovation and creativity. As for what services merchants are looking for, Fazlyev said it varies.
Restaurants have been focused on online ordering, delivery functions and curbside pick-up. More generally, the needs of the business are fairly specific to their niche, their customer set and their exact vision.
Investors involved are betting Ecwid will become the go-to solution for small businesses.
“COVID-19 is reinforcing what we already knew: e-commerce is vital, and it’s available to even the smallest of merchants now with Ecwid’s free tools that even novice Internet users can adopt quickly,” Phil Dur, PeakSpan Capital co-founder and managing partner said.
While well-funded competitors are focused more on making online selling as easy as possible for merchants by offering one-stop-shop solutions.
Ecwid stands out by its shopping cart tool that can integrate into existing web presences without calling for any changes in the content management system. In addition, it integrates the online shopping cart with a merchant’s POS systems.
An under-the-radar startup, the company has seen 300% growth in the last couple of months. To date, there are roughly 1.5 million SMBs across 175 countries (and 54 languages) using its e-commerce platform.
In 2019 its sign-ups doubled on the platform with a Net Promoter Score of above 60, according to the company. Revenue was not disclosed.
Ecwid’s goal is to become the most popular ecommerce option for the first time business owner and will join forces strategic partners to go after this ambition together. Laser focused on this, Fazylev said the company is not gunning for a significant exit, and instead seeking to build a long-standing profitable business.
“We have been watching Ecwid for many years. The company’s impressive capital efficiency and very strong long-term market opportunity made it an easy decision for us to partner with them during this next phase of growth,” said Dur.
Pete Chung, managing director and head of Morgan Stanley Expansion Capital, is also joining the board as part of this round.
Headquartered in Encinitas, the fast-growing startup has a total of 200 staffers with a dozen based locally. It plans to double its headcount over the next couple years.
Post-pandemic, Fazylev said the tech landscape will be less Silicon Valley and have more of an emphasis on a nicer place to live. “People who achieved a lot up in the Bay Area, are starting to realize that it’s so costly, stressful, and not really family friendly. I believe San Diego will see massive tech talent reallocations from the Bay Area, it’s a way better area with a much better quality of living and lower prices,” he said.