To support the global expansion plans, the global venture capital and private equity company Insight Partners has invested 145M$ in Germany’s commercetools. Commercetools will provide Insight Partners with a set of APIs that power e-commerce sales and related functions to meet the large demand of online customers.
Commercetools was founded in 2006 as a next-generation software technology company that offers a true cloud commerce platform, providing the building blocks for the new digital commerce age. Its leading-edge API approach helps retailers create brand value by empowering commerce teams to design unique and engaging digital commerce experiences everywhere – today and in the future. With the agile and componentized architecture, it will reduce significantly development time. resources required to migrate to modern commerce technology and meet new customer demands.
Since September 2014, commercetools is a daughter company of REWE digital GmbH and thus is part of the REWE group. It has offices in Germany (Munich, Berlin, Jena), the Netherlands (Amsterdam), Great Britain (London), the United States (Durham/North Carolina) and Singapore.
The Growth of commercetools
In an interview, the CEO and co-founder Dirk Hoerig has said that even the company was acquired by a non-tech company, REWE as part of a strategy to take some of its own e-commerce techs in-house, but commercetools had always continued to work with outside clients and has been growing at about 110% annually.
In the last one and a half years, the company launched new operations in the UK and Asia-Pacific and added Audi, Bang & Olufsen, Carhartt, and Yamaha to its client portfolio.
Commercetools CEO and co-founder Dirk Hoerig said: “Rather than relying on increasingly outmoded software, brands, manufacturers, and distributors are choosing our cloud-native and modern software platform to transform their digital commerce for today’s consumers.
“To answer this demand, we have built a strong and successful international business and this new investment will enable us to intensify the pace of our growth into the North American and Asia-Pacific markets, as well as leverage our success in Europe.
In June this year, commercetools also launched its Asia-Pacific hub in Singapore following a $17m investment to expand its business globally.
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The Opportunities of The Funding of Insight Partners
As part of the deal, Richard Wells and Matt Gatto, seasoned software investors and Insight Partners Managing Directors will become members of commercetools’ board of directors.
Wells said, “With a strong track record of investing in retail software leaders, we are excited to have the opportunity to invest in commercetools and help them scale up internationally. In our opinion commercetools represents the next wave of enterprise commerce software and have the potential to unlock powerful innovation and growth within the e-commerce sector.”
Gatto added, “We are looking forward to partnering with commercetools and providing more than 20 years of software and operational insights and best practices to help them continue to scale.”
Before REWE acquired the company, commercetools only raised around $30 million in outside funding. Therefore, this investment will have a great positive impact on commercetools’ expansion plans.
“The scale of this funding, combined with our tremendous strengths in technology and the quality of the team we are building, significantly furthers our ambition to become the number one commerce platform globally,” Dirk Hoerig said.
Commercetools Has no Intend to Expand to Medium and Small Companies
Similar to commercetools, Shopify also backed by Insight when it was still a private company. But while commercetools focuses more on companies that typically generate revenues in excess of $100 million annually, Shopify focuses more on medium and smaller customers, and it has ballooned to some 800,000 customers.
Commercetools has no plans to expand to smaller companies as Hoerig said: “We have no plan to compete against Shopify.” There is also no place in any of its strategy to extend into logistics, another important component of e-commerce services.
However, it doesn’t mean that commercetools doesn’t have a crowded field when it comes to competition. Hoerig noted that companies like SAP, Oracle and IBM are typical competitors and they are more often already the incumbent provider to large enterprises.
In today Amazon’s world, many companies such as Microsoft are competing with Amazon for cloud customers, also expanding their commerce services for business. Most of these companies have intended to replace them with something like commercetools, he said, when they decide they need a “more modern” approach.
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