BigCommerce is an Australian company focused around allowing people to easily setup their own online stores.
BigCommerce announced recently that it had secured US$15 million in funding, and now has offices in both Australia and the US. Darryl Adams asked co-founders Mitchell Harper and Eddie Machaalani some questions about the organisation.
1. Can you tell me about the history of BigCommerce?
Mitch and I met online in a chat room – we were both building content management system software, realised we didn’t live too far from each other in the suburbs of Sydney – and that’s how we initially connected.
I have got a bachelor of science and computing from UTS, Mitch is a genius programmer who was coding since he was 12. We built our first piece of software and the next day we literally had our first sale.
Our first project was a content management system similar to WordPress that we licensed to businesses and individuals looking to create a website. It was launched in January 2004 and we followed up with other products targeting small businesses, including email marketing software and knowledge management software to enable businesses to run an internal intranet and share documents.
Our big break came when we created the shopping cart software and e-commerce platform, which debuted in 2009 under the name BigCommerce.
We quickly signed up our first 1000 customers within three months, within 12 months of launching we signed up 10,000 customers and now we’re about to hit 20,000 customers after just 17 months.
2. What is the market like for e-commerce, and what does BigCommerce see is its best avenue for growing its user base?
“The e-commerce industry is rapidly expanding all around the world. It is already a very mature market in the US, UK, and other parts of the world, while Australia is experiencing a massive boom in online retail. The Internet has torn down pre-conceived notions of where and how to shop, and software like BigCommerce is enabling this massive shift.
“We’re growing so quickly because we’ve made it really easy to sell online with BigCommerce. You can setup your own online store in a few clicks but you can also setup shop on Facebook and mobile devices like iPhones and iPads. You can also push your products out for listing on eBay and shopping comparison sites, and rank in search engines like Google without being a ‘techy’. We’ve built all the marketing tools in so all you have to do is point-and-click and you’re 90% of the way there.”
3. What made the company choose venture funding in the US, and what was the pros and cons in choosing General Catalyst as the series A funding over other options?
There were a few different reasons. First, US venture capitalists understand how to adequately value a recurring revenue business like ours which is playing in a hot space (e-commerce). They understood our business model, our growth projections and the market and they know what it takes to win in a competitive space like e-commerce.
Second, we have 70% of our staff in the US and while we’re also growing our Sydney team significantly, the majority of the growth on the sales and marketing side is occurring in the US, so it made sense for us to work with US-based VCs who could put us in touch with other entrepreneurs who have done what we’re looking to do. This helps us build a support network of like-minded people and achieve our goals faster.
We were talking to different venture capital firms for at least a year before making a decision on General Catalyst. Most of the contacts we had with VCs over that year came from their associates reaching out to us so we didn’t have to do a lot of leg work early on. When we made the decision to raise capital and did our U.S tour to pitch different VC firms, General Catalyst had already done a ton of due diligence on the market opportunity, our company and our competitors. They were very eager to invest in the company.
General Catalyst also had very strong experience working with fast growing SaaS companies such as HubSpot and e-commerce companies such as DemandWare, both very fast growing start-ups with great technology, similar customer acquisition models and strong leadership. We quickly felt comfortable with the team, their alignment with our vision and the the strong network that we could leverage working with them.
We also found General Catalyst to be a lot more people oriented and less spreadsheet driven then some of the other firms we met with. This resonated with our philosophy of how to build and run a great company.
4. Did you consider local funding?
We did, but we felt the US venture capitalists understood our business model better. We’re also more like a Series B company as opposed to a traditional startup – we have almost 100 employees and have been profitable for a while now – so we felt we were outside the typical comfort range of most Australian venture capitalists who like to focus on the seed and early stage startups.
5. With the funding, will there be a flow on effect for the local IT scene for both workers and companies? WIll companies like BigCommerce be an inspiration to other startups in Australia? (looking at seeing if more companies will seek US venture funding)
Yes. We’re ramping our head count in Sydney so we can double the size of the team here within the next 12 months. We’re hoping to inspire the next generation of startups and are hoping to show the world that you don’t have to be purely in the US to create a great software company – you can also do it from Australia if you plan things properly.
6. Does BigCommerce benefit from local incentives like R&D and export support from the government. Is this something organisations like Austrade and Dept of FAT do well or needs to improve on?
We do get R&D concessions and grants, but there’s a lot the government could do to encourage and foster technical innovation in Australia. We bootstrapped our business from day one and were working 18 hours a day to build the best products we possible could, but if there were more opportunities for funding back then we might have accelerated our growth even faster.
From what we’ve seen of the government grants here, they’re helping very early stage startups and anything that’s done to continually stimulate and enable entrepreneurs like that is great in our books.