Relay Commerce raised $27 million to acquire more e-commerce tools

Relay Commerce, a New York Metropolis-based startup, raised $27 million in fairness and debt funding earlier this 12 months to gas extra acquisitions of e-commerce software program companies.

Why it issues: It is a twist on the e-commerce aggregator pattern that boomed through the pandemic — however the firm is betting on software program as an alternative of widgets.

Particulars: Relay Commerce was incubated inside NYC-based VC agency Major Enterprise Companions, which put in an preliminary $750,000 pre-seed verify final 12 months into the corporate to get it going.

• Major led the $6.25 million seed spherical (which closed in Might), with Twelve Beneath, AlleyCorp, and Max Ventures additionally collaborating. TriplePoint Capital offered a $20 million debt facility.

What they’re saying: “The larger, broader imaginative and prescient for us — I have a look at us as only a [software-as-a-service] firm,” co-founder and CEO Ricardo Hinds tells Axios.

• Relay has already acquired three firms at undisclosed costs: Fomo, Pop, and SmartrMail.
• It is at present focusing on firms with about $1 million-$3 million in annual recurring income, with their first couple thousand prospects, and whose tech is constructed atop platforms together with Shopify.
• “The preliminary focus is definitely bootstrapped [companies] as a result of the message actually resonates with these founders,” says Relay co-founder and director of acquisitions Austin Simon, including that it is attainable the corporate will even purchase venture-backed firms down the road as they, too, begin to search for extra exit choices given the present market.

Between the strains: The corporate factors to CM Group, which owns software program companies equivalent to Sailthru and Marketing campaign Monitor, as a mannequin for what it needs to construct. (Major Enterprise Companions normal accomplice Cassie Younger was beforehand CM Group’s chief buyer officer.)

• Relay additionally would not need to sundown the person merchandise’ manufacturers. As an alternative, the thought is that by bringing them underneath one roof, it might probably run — and develop — them extra effectively and cross-sell to their respective prospects.
• It is also not fazed by Shopify’s personal latest admission that it overestimated the everlasting leap of e-commerce amid the pandemic growth (and subsequently laid off about 10% of its workforce in July).

The underside line: Even in e-commerce, software program margins stay king.

Editor’s be aware: This story has been up to date to make clear that Shopify is among the many software program instruments Relay Commerce is concentrated on, not the one one.