7 ways to scale a tech company with venture capital
Fresh from raising $10m mySupermarket CEO Allon Bloch reveals the secrets of meeting venture capital demands
In April, mySupermarket, the grocery comparison site which launched in Britain back in 2006 secured a $10m investment, led by WPP Digital, with support from existing investors Greylock Partners, where LinkedIn founder Reid Hoffman is a partner, and Israel’s leading venture capital firm Pitango.
mySupermarket has already received three rounds of investment worth $32m, receives around three million unique users a month, and is currently growing at an annual rate of more than 100%. Expansion into Australia, Brazil, and the US, are scheduled too. So CEO Allon Bloch knows a thing or two about harnessing funds for rapid growth. He shared seven insights with Growing Business:
1. Explore every introduction fully
We had a mutual introduction and explored it; it wasn’t a propos an investment. Things just went from there. I met the president of WPP digital and they suggested I try to secure investment. It was a very simple conversation in the end.
2. Focus on product
The investment will be 100% focused on technology and product. One key focus will be a new application for mobile; with a mobile app, we can allow our customers to interact anywhere, online and offline, which will be very powerful. More will be announced further down the line.
3. Keep some independence
We’re going to have one board member from WPP, but it’s not going to change the way we work. At the most basic level, this is a minority investment; we’ll try and stay independent. It’s the equivalent of doing a VC round for me.
4. Consider what investment partners can offer beyond cash
I had been thinking about doing a funding round, and we had various VC and private equity firms interested. We’ve already got two great VC firms involved in the business, and I’ve been a VC myself. But right now our business is growing very quickly, we’re expanding into new territories, and I thought WPP Digital was a good fit. WPP offered an excellent understanding of our business, and they can open a lot of doors.
We recently launched a very exciting concept, called brand stores, where the likes of Nivea, Kellogg, Danone have their own mini-store on our site. If you subscribe to the Nivea brand store, you get relevant information about their various products and new product launches. WPP can help these brands connect with their customers, and influence people at the point of sale.
5. Update your investors continuously
I already spoke to our investors Greylock and Pitango every week, and I meet them often, and nothing will change there. I always say that, if you see VCs too often, you’re either getting sold or you’re doing horribly. Neither applies to us!
6. Get new funding rounds as you require them
Securing four rounds is not unusual. Pre-IPO Facebook had also done four rounds of funding, Twitter has done more than four. If you want to build a big business, you need to invest and hire people. We have 75 people on board, we have ambitions to increase that; in fact, we want to double the engineering team.
Furthermore, we want to diversify and make our product better, and we’re also expanding geographically. We’re planning to go to the US and other major markets. As long as we have a business model to support the business that’s not foolish, it’s a calculated risk. In the online space, you need to keep investing.
7. Maintain your uniqueness
There’s a gazillion price comparison sites out there, driven by affiliate fees. mySupermarket is different – we’ve taken a unique approach to shopping in terms of maximising value, and working with the customer.
Our consumers save about 20% on their shopping bill. We take them through the maze of shopping; when a user is browsing our site and creating a shopping cart, we compare non-identical items, and create parallel shopping carts from rival providers. Users get personal recommendations, based on their shopping history.
Ultimately we’re a technology company which also has retail expertise, that’s why the proposition is so attractive.