London-based e-commerce software startup Shop Circle has raised $120 million in Series A funding, the company announced Wednesday.
Led by Forbes Under 30 Europe listers Luca Cartechini and Gian Maria Gramondi, Shop Circle provides budding e-commerce brands the tools they need to start, grow and sustain their businesses, such as online store design and inventory management.
This raise—led by 645 Ventures and 3VC—brings the startup’s total funding to $140 million. The cofounders say the two-year-old startup has been profitable for 11 months, but declined to comment on revenue or valuation.
Shop Circle’s growth coincides with a boom in the e-commerce industry at large. Before the pandemic, e-commerce in the U.S. was growing between 13% and 15% each year.
But during 2020, it grew by 33%, according to Key Banc. That pandemic-induced growth shows little sign of slowing today.
While 500,000 businesses sold on Shopify in 2017, that number has jumped to the multi-millions in 2023, though Shopify declined to share exact numbers.
That growing number of businesses, and the proliferation of software to help those businesses grow, is where Cartechini and Gramondi saw an opening.
They realized some merchants were working with up to 35 separate app providers to accommodate all of their needs across software, supply chain, inventory, upselling and marketing, Cartechini explains.
“The number of software [tools] utilized by e-commerce brands went up approximately five times over the last five years,” Cartechini says. “We wanted to centralize everything under one brand, which is Shop Circle.”
Today, Shop Circle functions as a “suite” of tools all under one umbrella, including everything from referral programs to restock alerts to a mobile app builder. Shop Circle solely works with Shopify sellers, and offers merchants 37 different tools to build their businesses on Shopify.
“The number of brands has increased massively, so the competition also increased,” Gramondi says. “In order to become appealing for their customers, brands have to be superior in terms of product, in terms of conversion, and last but not least, retention.”
Shop Circle’s variety of offerings touch each of those domains, he says.
Emily Pfeiffer, a principal analyst at Forrester Research, agrees that streamlining e-commerce software has potential. The business owners she advises have been continually frustrated by the number of databases they have to use.
And while it used to be sufficient for separate apps to “talk to each other” in the cloud or otherwise, the key now is to consolidate and unify, she says. That’s why Shop Circle, as a single-vendor, might be appealing to merchants.
However, Pfeiffer cautions Shop Circle clients of the dangers of “lock-in”—where customers become solely dependent on a certain vendor, product or service—because that ultimately limits how nimble they can be when they need to make a change.
“We used to be afraid of vendor lock-in, and I feel like we’re not afraid enough right now about services lock-in,” she says.
For small business owners and clients of platforms like Shop Circle and Shopify, it’s crucial to understand how the ecosystem comes together and how to maintain it if those systems break, she adds.
In some ways, the Shop Circle team feels reliant on external tools, too.
That’s why the cofounders and their investors are thinking about diversifying their clientele to sellers on platforms like Amazon and other e-commerce sites, says investor Nnamdi Okike, cofounder and managing partner of 645 Ventures.
Along with potentially diversifying the client base, Cartechini and Gramondi also plan to put new investment dollars into building their team of software developers and implementing more AI technology—like automating the most common customer service inquiries.
But Shop Circle is still maintaining a personal touch. The business recently launched a consulting program where employees advise merchants on the best tech stack, or grouping of Shop Circle tools, based on their needs.
This article was first published on forbes.com and all figures are in USD.
