FinTech startup plans to ramp up staff, accelerate product development.
Riding on the coattails of a growing e-commerce sector, Convictional has secured $50.7 million CAD ($40 million USD) in Series B funding.
YC Continuity led the round with participation from all of its existing investors, including Lachy Groom (an early employee of Stripe and now solo venture capitalist), FundersClub, Claire Johnson (former Stripe COO), Scott Belsky (chief product officer, Adobe), Dave Cheesewright (former CEO, Walmart International), and billionaire businessman Ram Shriram.
Convictional offers a B2B e-commerce platform to help retailers and distributors source, onboard, transact, and scale with suppliers of any kind. The startup plans to use the new funds for product development, and for the expansion of sales and marketing. Convictional hopes to add another 80 employees to its existing 45 person team.
“Convictional is modernizing B2B trade by making it drastically easier for retailers and brands to integrate.”
The funding round closed in mid-January.
YC Continuity is Y Combinator’s growth fund. Some of YC Continuity’s investments include Checkr, Deel, Segment, and Stripe. The investment continues Convictional’s relationship with Y Combinator; it was a member of the incubator’s Winter 2019 batch of startups.
Ali Rowghani, managing director of YC Continuity, joins Convictional’s board. Previously, he served as the COO of Twitter, from 2012 to 2014, where he was in charge of Twitter’s product, design, business development, developer platform, and media teams. He was hired as Twitter’s first CFO, and served in that role from 2010 to 2012. Before Twitter, Rowghanii served in several roles at Pixar Animation Studios, Inc.
“Convictional is modernizing B2B trade by making it drastically easier for retailers and brands to integrate,” said Rowghani. “Dropshipping is a $100 billion-plus market in the US alone — and that is only a fraction of the overall wholesale opportunity they can serve with time.”
Dropshipping allows entrepreneurs to start an online business and sell products to their buyers without ever stocking the items themselves. Instead, when a dropshipping store sells a product, it purchases the item from a third party and has it shipped directly to the customer.
Convictional targets online retailers looking to onboard and integrate with third-party brands and vendors in order to sell products without taking on inventory risk. The startup is looking to address what it says is a $1 trillion problem – the fragmentation of B2B ordering, which Convictional co-founder Chris Grouchy said creates friction for sales, IT, and e-commerce teams. Convictional’s solution is a centralized commerce platform that is meant to handle any order from any B2B customer.
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“The retailers that are thriving have today found a unique playbook to co-exist with the continued rise of the global mega-marketplaces, said Rick Watson, founder of RMW Commerce Consulting. “That playbook includes three things: identifying emerging brands before they become household names, onboarding and promoting them at lightning speed, and helping these brands tell their stories to the world.”
Convictional claims that more than 1,000 brands joined its platform in 2021, and contends that before using its services “retailers like Indigo and Harry Rosen were only able to onboard four to five net new brands a quarter, and their supplier onboarding times averaged two to three months.”
Convictional claims that by using its service retailers are able to onboard 20 to 30 brands a quarter and their onboarding times take 10 days on average.
Given that Convictional works with online retailers, the $50 million vote of confidence from investors makes sense with the growth of e-commerce. In 2021 there were over 27 million e-commerce users in Canada, accounting for 72.5 percent of the Canadian population, according to a guide from the US International Trade Administration. This is expected to grow to 77.6 percent of the Canadian population in 2025.
Statistics Canada reported e-commerce retail trade sales in Canada amounted to an all-time high of $4.8 billion in December 2020, surpassing the $4 billion recorded in May 2020 from the coronavirus pandemic lockdown measures.
While Convictional previously focused on the North American market, Convictional recently expanded its customer base to the United Kingdom with its recent partnership with furniture retailer Made.com.
Convictional secured $6.7 million in Series A funding in September, 2021, and In 2019 the startup raised a $3 million seed round, after graduating from Y Combinator.
Grouchy and co-founder Roger Kirkness are both former Shopify Plus team members who helped launch Shopify’s wholesale channel, and who launched Convictional in 2017.