Durham startup that aids e-commerce lands $75 million injection of cash for growth
Spreedly, a Durham-based software maker that helps e-commerce merchants process payments, has raised $75 million in capital as the company looks to accelerate its growth.
The startup, founded in 2012, has now raised more than $80 million in total and plans to use the money, in part, to double its headcount and grow its business abroad.
The latest round of funding comes from the private equity firm Spectrum Equity, which has invested previously in companies like Grubhub, Bitly and Survey Monkey.
Spreedly’s online payment software helps e-commerce merchants and marketplaces featuring multiple sellers securely process payments from buyers. The company also stores credit card data in a secure digital vault that makes future payments by buyers easier.
Justin Benson, Spreedly’s CEO, said the funding will allow the company to be more aggressive in trying to win customers.
Because the company had been operating off a bootstrap budget for so long, he said, Spreedly has operated more conservatively than he wished.
With the market for e-commerce swinging into the company’s favor in recent years, he added, now is the time to invest more heavily.
As e-commerce becomes an integral part of retail, online payment processing companies, like Stripe and PayPal, have become critical partners for many businesses.
U.S. consumers alone are expected to spend $587 billion online in 2019, representing more than one in every 10 dollars of total retail spending, according to the company eMarketer. By 2023, online sales will reach $969.7 billion, a 65.2% increase, eMarketer estimates.
While in the early days of e-commerce, customers tended to choose just one online payments software, Benson said, today they are likely to pick two or more depending on the strengths of each provider.
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“Even with the best provider there is always a lot of restrictions,” Benson said. “There are missing pieces in functionality, or they don’t operate in a particular region.”
Benson, originally from Australia, thinks that Spreedly stands to grow quickly outside of the U.S. Specifically, the company has developed a focus in fast-growing Latin America, where it processes almost as many sales as it does in the U.S.
Despite its small amount of previous funding, the company has already posted impressive growth, said Adam Margolin, managing director at Spectrum Equity.
“With minimal prior funding, Spreedly has grown rapidly and today powers nearly one million transactions daily, 108% more than the year before,” Margolin said in a statement. “We are thrilled to have this opportunity to back Justin and the rest of the Spreedly team and to support their ambitious growth plans.”
While the company declined to give out specific revenue numbers, Benson said Spreedly is now over $10 million in revenue per year.
“We are now focused on how to get to $50 million and then to $100 million,” he said.
Even before the latest round of funding, Spreedly had been expanding its presence in downtown Durham. However, those growth plans are about to accelerate.
Earlier this year, the company said it would be trading its office on Foster Street in Durham for 25,000 square feet in the new Innovation District campus in downtown Durham. It plans to move into the office next April.
The company has around 65 employees in Durham at the moment, but it plans to double the headcount in the next year, Benson said. It is also looking to open offices outside the U.S.
The company could also potentially be on the hunt to buy other startups.
“Anything that will accelerate new products or markets, we will build or buy,” Benson said.
This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate
This story was originally published November 13, 2019 at 1:08 PM with the headline "Durham startup that aids e-commerce lands $75 million injection of cash for growth."
