Singapore-based startup TradeGecko is in talks with investors to raise between $8-12 million in Series A funding, its chief executive officer and co-founder Cameron Priest said.
TradeGecko, which was set up in 2012 by three Kiwi entrepreneurs – Carl Thompson and brothers Cameron and Bradley Priest – is a B2B web-based inventory and order management software provider for independent brands and their retailers.
The company has so far raised about $1.2 million in seed funding from about four investors in two rounds.
“We raised (seed) funding in 2012 and in 2013 and we will be doing something soon (raising funds) – within the next three to six months. It looks like every 12 months we are doing a round of financing,” Priest (Cameron) said in an interaction with DEALSTREETASIA.
TradeGecko boasts of some impressive numbers, yet raising capital will be no easy business. Priest admits that the company had met some potential investors, including SingTel Group’s venture capital fund – Innov8, as well as investment arm of Japan’s SoftBank Corp, but discussions had not progressed.
“We have been unable to get over the line with some of these investors,” he said, adding that the company already had an internal policy in place to deal with a potential fund crunch.
“Internally, it is our strategy that at any given point of time, we should be able to get profitability within two months i.e.if we don’t hire anyone in the next two months, we should be profitable. So if say, something goes wrong (related to funding) and we need to get to profitability, we can do so in a very short period of time.”
Typically, Singapore startups that breeze through the seed funding stage, hit the wall in the ‘series rounds’, which is much more competitive.
Priest, though, is confident that the first series round will involve both local and international investors and soon. “It may be a balance of both local and international investors, who have done this (funding) before,” he said.
The company will use the proceeds to develop the product further, work on technology and also double employee count to more than 100.
With about 40% sales coming from North America, TradeGecko has set up a support functions office in the Philippines, a an economically better alternative to being present in the UK, Canada or the US, said Priest.
Simultaneously, TradeGecko is also gearing up to have a centre in the Silicon Valley, US. “We are at a point where presence in the US will accelerate our growth,” he explained.
Its biggest markets continue to be the US, Canada, Australia, New Zealand UK, Singapore and Hong Kong. The startup is targeting $100 million in revenues within 36 to 48 months, revealed Priest.
While the company’s cash burn in higher than the revenues, the chief executive’s confidence stems from the fact that the company’s products are being used in over 80 countries, across 3086 different cities, and most importantly by about 4,000 paid customers.
Priest said that they were billing larger customers hundreds to thousands of dollars a month, but declined to reveal sales numbers. Back of the envelope calculations, where all 4000 paid clients who use its inventory management software pay just the minimum fee of $100 per month, will see it garner about $400k during every 30-day cycle. This however may not be close to its actual sales figures as a third of its customers are on annual contracts.
Its target is to hit $100 million in revenues within 36 to 48 months.
Meanwhile, competition in this segment is also heating up, with more than a dozen startups courting clients in a bid to solve their inventory management nightmares. “There are a bunch of competitors, who are focussing on different segments – largely on e-commerce. We are mostly looking at the traditional wholesale distributors and manufacturers; though we do have e-commerce customers, as well. In the short term, it is about reaching out to as many businesses and capturing the market as quickly as possible,” Priest said.
TradeGecko initially had evaluated both San Francisco and Singapore as bases, before deciding on the city state. “Singapore is a good place to be based if you are doing a regionally focussed business – it is like, I am in the US, but this will be my base for South East Asia,” he added