Onramp Funds accelerates e-commerce finance platform with $42 million in equity and credit – TechCrunch
Onramp Funds, an Austin-based company that provides financing for e-commerce sellers, raised $42 million in equity and credit to expand its working capital offering.
CEO Eric Youngstrom founded the company in 2020 after a career at multi-carrier shipping software company ShippingEasy. One of the problems with shipping back then, in 2012, was that you had to connect to each individual market. For example, Amazon, eBay or Shopify, to view orders and understand how to process them. What ShippingEasy has done is bring it all together under one data management platform.
When ShippingEasy was acquired by Stamps.com in 2016, Youngstrom switched to the new company and saw a new problem emerge: small e-commerce merchants couldn’t afford to ship an order because their credit cards ran out. .
“People just didn’t have the money to complete the order,” he told TechCrunch. “The money is there – in three days it will be deposited in your account, but if you don’t make it work today you will lose the order. Amazon has set the standard there.
Youngstrom and his team tried to solve the problem inside Stamps.com, but couldn’t find a good solution, so he decided to leave in 2020 and launch a product that could help merchants.
The solution offered by Onramp Funds was a data-driven technology. The company doesn’t just look at high-level sales, which Youngstrom says differentiates its business from competitors, but considers historical sales data to come up with a sales forecast.
Onramp then provides working capital from this data to solve the costs of shipping, fulfillment, advertising and inventory of goods so merchants can take their own capital and redeploy it into their growing business. . The business makes its revenue by charging a percentage of sales, usually around 1%.
Providing working capital to small businesses is something of a personal mission for Youngstrom, who grew up around small-town business owners and tied to the need to support local businesses. He also notes that e-commerce sales in the US still represent less than 20% of all retail sales, so there is over 80% of retail still ripe for e-commerce to take over more. of market shares.
“If we can help a small business owner, we can make the world a better place,” he added. “If we can help people succeed in their jobs, I think that’s wonderful.”
Meanwhile, Youngstrom declined to provide the breakdown of the $42 million equity-to-credit line ratio. Luther King Capital Management led the financing, which also included a group of high net worth individuals.
Since officially launching the working capital offering nine months ago, Onramp has now worked with hundreds of clients, some of whom have used the service multiple times. Revenue increases 30% month over month.
While the line of credit will be used to fund small businesses, the equity portion will be used to grow Onramp’s customer acquisition engine and hire additional staff in the areas of engineering, product, sales, marketing and customer success. The company currently has 27 employees.
The company is also providing more guidance to merchants when it comes to navigating the supply chain bottleneck that has worsened during the global pandemic.
“We’re building a really cool company that’s having great success and very early standards, and we plan to be here long term to help these guys out,” Youngstrom added.