The European Data Protection Board (EDPB), an expert steering body which advises EU lawmakers on how to interpret rules wrapping citizen’s personal data, has warned the bloc’s legislators that a package of incoming digital regulations risks damaging people’s fundamental rights — without “decisive action” to amend the suite of proposals.

The reference is to draft rules covering digital platform governance and accountability (the Digital Services Act; DSA); proposals for ex ante rules for Internet gatekeepers (the Digital Markets Act; DMA), the Data Governance Act (DGA), which aims to encourage data reuse as an engine for innovation and AI; and the Regulation on a European approach for Artificial Intelligence (AIR), which sets out a risk-based framework for regulating applications of AI. 

The EDPB’s analysis further suggests that the package of pan-EU digital rules updates will be hampered by fragmented oversight and legal inconsistencies — potentially conflicting with existing EU data protection law unless clarified to avoid harmfully inconsistent interpretations.

Most notably, in a statement published today following a plenary meeting yesterday, the EDPB makes a direct call for EU legislators for implement stricter regulations on targeted advertising in favor of alternatives that do not require the tracking and profiling of Internet users — going on to call for lawmakers to consider “a phase-out leading to a prohibition of targeted advertising on the basis of pervasive tracking”.

Furthermore, the EDPB statement urges that the profiling of children for ad targeting should “overall be prohibited”.

As it happens, the European Parliament’s internal market and consumer protection (IMCO) committee was today holding a hearing to discuss targeted advertising, as MEPs consider amendments to a wider digital regulation package known as the Digital Services Act (DSA).

There has been a push by a number of MEPs for an outright ban on tracking-based ads to be added to the DSA package — given rising concern about the myriad harms flowing from surveillance-based ads, from ad fraud to individual manipulation and democratic erosion (to name a few).

However MEPs speaking during the IMCO committee hearing today suggested there would not be overall support in the Parliament to ban tracking ads — despite compelling testimony from a range of speakers articulating the harms of surveillance-based advertising and calling out the adtech industry for misleading lobbying on the issue by seeking to conflate targeting and tracking.

Although retail lobbyist, Ilya Bruggeman, did speak up for tracking and profiling — parroting the big adtech platforms’ line that SMEs rely on privacy invasive ads — even as other speakers at the committee session aligned with civil society in challenging the claim.

Johnny Ryan, a former adtech industry insider (now a fellow at the ICCL) — who has filed numerous GDPR complaints against real-time bidding (RTB)’s rampant misuse of personal data, dubbing it the biggest security breach in history — kicked off his presentation with a pointed debunking of industry spin, telling MEPs that the issue isn’t, as the title of the session had it, “targeted ads”; rather the problem boils down to “tracking-based ads”.

“You can have targeting, without having tracking,” he told MEPs, warning: “The industry that makes money from tracking wants you to think otherwise. So let’s correct that.”

The direction of travel of the European Parliament on behavioral ads (i.e. tracking-based targeting) in relation to another key digital package, the gatekeeper-targeting DMA, also looks like it will eschew a ban for general users in favor of beefing up consent requirements. Which sounds like great news for purveyors of dark pattern design.

That said, MEPs do appear to be considering a prohibition on tracking and profiling of minors for ad targeting — which raises questions of how that could be implemented without robust age verification also being implemented across all Internet services… Which, er, is not at all the case currently — nor in most people’s favored versions of the Internet. (The UK government might like it though.)

So, if that ends up making it into the final version of the DMA, one way for services to comply/shrink their risk (i.e. of being accused of ad-targeting minors) could be for them to switch off tracking ads for all users by default — unless they really have robustly age-verified a specific user is an adult. (So maybe adtech platforms like Facebook would start requiring users to upload a national ID to use their ‘free’ services… )

In light of MEPs’ tentativeness, the EDPB’s intervention looks significant — although the body does not have lawmaking powers itself.

But by urging EU co-legislators to take “decisive action” it’s firing a clear shot across the Council, Parliament and Commission’s bows to screw their courage to the sticking place and avoid the bear-pit of lobbying self-interest and remember that alternative forms of online advertising are available. And profitable.

“Our concerns consist of three categories: (1) lack of protection of individuals’ fundamental rights and freedoms; (2) fragmented supervision; and (3) risks of inconsistencies,” the Board writes in the statement, going on to warn that it “considers that, without further amendments, the proposals will negatively impact the fundamental rights and freedoms of individuals and lead to significant legal uncertainty that would undermine both the existing and future legal framework”.

“As such, the proposals may fail to create the conditions for innovation and economic growth envisaged by the proposals themselves,” it also warns.

The EDPB’s concerns for citizens’ fundamental rights also encompass the Commission’s proposal to regulate high risk applications of artificial intelligence, with the body saying the draft AI Regulation does not go far enough to prevent the development of AI systems that are intended to categorize individuals — such as by using their biometrics (e.g. facial recognition) and according to ethnicity, gender, and/or political or sexual orientation, or other prohibited grounds of discrimination.

“The EDPB considers that such systems should be prohibited in the EU and calls on the co-legislators to include such a ban in the AIR,” it writes. “Furthermore, the EDPB considers that the use of AI to infer emotions of a natural person is highly undesirable and should be prohibited, except for certain well-specified use-cases, namely for health or research purposes, subject to appropriate safeguards, conditions and limits.”

The Board has also reiterated its earlier call for a ban on the use of AI for remote biometric surveillance in public places — following an joint statement with the European Data Protection Supervisor back in June.

MEPs have also previously voted for a ban on remote biometric surveillance.

The Commission proposal offered a very tepid, caveated restriction which has been widely criticized as insufficient.

“[G]iven the significant adverse effect for individuals’ fundamental rights and freedoms, the EDPB reiterates that the AIR should include a ban on any use of AI for an automated recognition of human features in publicly accessible spaces — such as of faces but also of gait, fingerprints, DNA, voice, keystrokes and other biometric or behavioural signals — in any context,” the Board writes in the statement.

“The proposed AIR currently allows for the use of real-time remote biometric identification systems in publicly accessible spaces for the purpose of law enforcement in certain cases. The EDPB welcomes the recently adopted EP Resolution where the significant risks are highlighted.”

On oversight, the EDBP sounds concerned about data protection bodies being bypassed by the bloc’s ambitious flotilla of digital regulations updates — urging “complementarity in oversight” to enhance legal certainty, as well as emphasizing the need for DPAs to be provided with “sufficient resources to perform these additional tasks”. (A perennial problem in an age of ever bigger data.)

Legal certainty would also be improved by including explicit references to existing data protection legislation (such as the GDPR and ePrivacy Directive), it argues, to avoid the risk of incoming data packages weakening core concepts of the GDPR such as consent to data processing.

“It also creates the risk that certain provisions could be read as deviating from the GDPR or the ePrivacy Directive. Consequently, certain provisions could easily be interpreted in a manner that is inconsistent with the existing legal framework and subsequently lead to legal uncertainty,” the Board warns.

So far from the EU’s much vaunted digital regulation reboot strengthening protections for citizens to boost their trust in data-driven services there is a risk of death by a thousand cuts — and/or regulatory complexity — to foundational fundamental rights, with potentially ruinous consequences for the bloc’s much proclaimed ‘European values’.

Warsaw-based Packhelp has been riding the boom in ecommerce and on-demand delivery to scale a business that helps even the smallest brands wrap their wares in eye-catching custom packaging, while counting giants like H&M and UberEats among its customers, too.

Since being founded back in 2015 — launching its custom packaging design platform in 2016 — Packhelp says it’s attracted more than 50,000 customers across 30 countries (with an operational focus on Europe).

In total its platform has spawn some 50 million pieces of packaging over its five+ year run.

Today it’s announcing a €40 million (~$45.6M) Series B round to fuel its next phase of growth as it eyes expanding its regional operations — including by strategic M&A.

The round is led by Paris-based b2b tech growth fund InfraVia Growth, with participation from PortfoLion, FJ Labs and the European Investment Bank. Prior investors Speedinvest, ProFounders, Market One Capital, Inovo, White Star Capital and business angels also joined the round — which brings Packhelp’s total raised to €52M ($60M).

The startup says the B round is the largest for a business at this stage in Poland and one of the biggest in Central and Eastern Europe. (Another recent chunky round in a similar space is the $45M Series A for Latvia’s Printify this fall — although the latter is focused on custom merch so its customers could, in theory, also be customers of Packhelp’s custom packaging.)

The VC funding follows a $10M Series A Packhelp raised back in March 2019.

Packhelp’s minimum order is just 30 boxes so it’s able to serve microbrands like creators or ecommerce platform sellers as they scale — in addition to larger enterprises like on-demand food delivery giants. Though its business currently skews heavily towards smaller players: At present it says circa 70% of its customers are small companies vs 30% being mid-market & enterprise clients.

“The new round will allow us to put more focus on the latter,” it tells TechCrunch.

The pandemic-induced boom in food deliveries is one factors that looks to have helped fuel Packhelp’s growth.

And it says that expanding to add a SaaS product focused on enterprise companies that run in-house packaging operations will be its next step.

On the growth front it says it grew 2.5x over the past 12 months — and is anticipating growth of “at least 2x” next year.

Its core software is an online editor, called Packhelp Studio, which it touts as automating the design, quality and assurance process for orders — with friction-(and cost)-shaving features such as a library of ready-to-use patterns, shapes and fonts, meaning customers don’t need an in-house designer to turn out some nappy branded packaging for whatever they’re selling.

Packhelp already offers a range of custom packaging — from mailer boxes and bags to food boxes and a variety of product box/tube etc options. But expanding this mix is also part of the plan for the Series B.

Here it points to the boom in so-called quick commerce (aka super speedy urban deliveries of groceries and other convenience items) as one area it’ll be seeking to tap into through a beefed up product line-up. And investors have certainly been pouring dollars into puffing up regional on-demand convenience plays since the pandemic struck…

Tweaking its products so it can also offer more affordable options is another focus.

And it says it wants to add new services — including around “sustainability” (see below).

Expanding and deepening its operations in Europe is another focus — hence eyeing strategic M&As to help with growth.

“We want to strengthen our position in key markets by becoming closer to our customers through opening local hubs,” it says on that. “This will make our processes better and more transparent, cut lead time to even the most remote locations, offer better pricing, localise our product lineup and finally build local supply chains to reduce carbon emissions created during transit.”

“We will take the first steps to global expansion too but the focus right now is on Europe,” Packhelp adds.

Asked what it’s eyeing for M&A it also told us: “Our M&A efforts are mostly supporting our mission to be closer to our customers. We are looking for companies that will help us deliver on our strategic plans faster and increase our tech advantage, especially around process and design automation. We will approach any M&A proposition carefully though as we are bullish about keeping our company culture intact and staying on top of our mission.”

What does ‘sustainable packaging’ mean?

Developing new “sustainable products and services” is another major touted focus for Packhelp’s Series B.

But whether or not there ends up being real substance here — vs marketing greenwashing — remains to be seen.

The climate emergency has dialled up attention on global supply chains. And, indeed, on the whole wasteful, resource-requiring packaging business itself. So, on sustainability, Packhelp may be looking over its shoulder at the prospect of increased scrutiny plus a new wave of startup competition packing shinier environmental credentials — and feeling the need to update its offering.

Back in September, for example, Index Ventures led a $12.2M seed round in another packaging-related startup, Sourceful — which describes its focus as “sustainable sourcing”. And there have been a whole raft of supply chain transparency/sustainability startups popping up in recent months — touting enhanced data and benchmarking around product suppliers — which could, eventually, put the squeeze on sustainability ‘greenwashing’.

At the time of its seed raise, Sourceful was also slating a forthcoming design capability which it said would help businesses fully customize packaging while simultaneously applying a sustainability lens — by presenting them with real-time data on potential carbon emissions related to their design choices.

So — tl;dr — it could soon be the case that ‘custom packaging’ means a lot more than just getting a design of your liking and the right color paint slapped on the cardboard; it’ll be about who can most credibly shrink the associated carbon footprint — to the tiniest possible quantum — and still help get a product delivered intact to a happy customer.

In Europe, meanwhile, incoming regulations are set to expand sustainability reporting requirements for large companies — meaning enterprises will necessarily be doing more interrogating of their supply chains to meet these environmental audits.

The global supply chain crunch that’s been affecting a number of industries in recent months (including as a result of the pandemic) is another factor that’s likely driving demand for increased visibility around supply chains, more generally.

But climate breakdown drives natural disasters which can also affect supply chains. So you certainly can’t remove supply chain resilience from wider considerations about the environments they operate in.

Packhelp says its planned SaaS solution for enterprises will not only seek to “digitise and modernise a stagnant industry that relies on outdated, ill-fitting tools and still largely runs over email”, as it puts it — but says the forthcoming “smart management software” will help customers “streamline and optimise internal workflows” to better manage their relationships with packaging suppliers.

It further suggests it will be able to use its “technical knowledge and industry know-how” to give enterprise clients a better understanding of price and lead time behaviour (and thereby “help improve supply chains that are facing unprecedented challenges and turmoil”).

A verified base of “sustainable packaging suppliers” — plus features that help measure carbon footprint and offset impact — will also be central to the SaaS solution, it suggests.

However a key challenge for packaging platforms generally is that packaging itself uses resources and expends energy on something that feels inherently wasteful — as it’s typically disposable and most likely instantly thrown away (or at best recycled) after use. All of which generates carbon emissions — before you even consider how packaging availability may support growth of wasteful convenience ecommerce (which in turn amplifies demand for more packaging). So how much credibility a claim of “sustainable packaging” can have is worth consideration.

The circular economy would prioritize packaging reuse vs recycling — not to mention longevity of products vs quick, impulse-buy driven commerce — and there’s little sign of that being anywhere close to being delivered at scale as yet.

Asked about the problem of packaging being wasteful, Packhelp argues that entirely eliminating packaging for ecommerce use-cases risks creating more waste than it would remove — i..e. if products arrived broken/damaged etc.

Instead it argues that sustainability in this context will come to mean “customisable packaging, that is designed with a specific product” — meaning it’s made for exactly the shape and size of the product being shipped; so would therefore “use significantly less packaging than the one-size-fits-all box approach currently adopted by the major ecommerce companies whilst also offering better protection for the product”, per Packhelp’s claim.

“In our view, customisable packaging designed to fit the dimensions of a product, can not only reduce cardboard usage by 10-30% per item shipped (as items are tightly packed, not sitting in a box much larger than the item), but it can also reduce the volume of cargo bulk required in a carbon-heavy cargo plane or truck,” it suggests, also arguing: “This means that the transport element of ecommerce can be made more sustainable by customising packing to a specific item, as fewer planes and trucks are required across the supply chain, as packaging sizes are optimised.”

Packhelp further claims it’s working to increase “sustainability” across its marketplace by bumping up the proportion of (all) packaging items sold via its platform that use recycled material.

Although last year this was only 65% (albeit it’s quick to claim that 92% of the packaging it sold was capable of being recycled after use; not that that means it was, though).

It also points to a consultancy service it currently offers to (a sub-set of paying) customers (on its Plus tier) — which it says provides them with support to minimize packaging waste with their orders. Expanding access to this service is on the cards — in another of its planned ‘sustainability’ tweaks.   

Packhelp does say it wants to go further — saying it’s set itself the goal of conducting an environmental audit of all packaging items on its marketplace — and, ultimately, introducing carbon-neutral packaging (at some unspecified future point).

It says it has begun this environmental audit process — which entails gathering info from suppliers on its marketplace; with a first focus on best-selling packaging items — and will publish the first results of the audit in Q1 2022, with implementation slated to follow “shortly after”.

“As a result of the audit, we will know the average carbon and water footprint of a certain packaging item ordered with Packhelp. This information will be available to clients on the product page so it is visible before they make a purchase and we hope this will drive our customers to become more environmentally conscious when choosing their packaging,” it tells TechCrunch.

“We already see a lot of our customers adding information about certain eco-properties of their packaging ordered via Packhelp in our virtual editor. For example, there is an icon to demonstrate that this packaging type is recyclable, or that it was made out of recycled content. We hope this trend will continue and our customers will continue to share further information about the carbon and water footprint of the packaging they’re using to customers,” it adds.

What about carbon neutral packaging? How does it propose to deliver on that claimed ambition?

“This will be mainly done through closer co-operation with our suppliers, opting for green energy and cutting emissions caused by the transport of our packaging,” it says, without specifying how reductions in emissions will sum to the claimed goal of zero emissions. (Although it adds: “At this point, we’re not excluding the idea of using carbon offsetting, as a complementary measure to lowering the carbon footprint.”)

“This project will be carried on by our soon to be appointed sustainability team,” it continues of this nascent component of its plan, adding: “As soon as we have a detailed roadmap in place, we will be sharing the information with our customers.”

Packhelp has an existing partnership with tree planting charity, OneTreePlanted — in order that its customers can tout carbon offsets related to production of the packaging that their customers see — saying that, so far, this has resulted in 15,000+ trees being funded and planted via its platform. 

So, over around 100 years, those trees might be able to suck up ~15,000 tonnes of carbon dioxide — assuming (of course) that they survive that long (NB: Climate change driven droughts and forest fires as well as increased demand for natural resources like tree pulp to produce stuff like packaging is, sadly, making survival hard for the humble tree.)

However green campaigners have repeatedly warned that carbon offsets alone don’t work.

What’s actually required to reduce emissions and tackle the climate emergency is a radical reduction in consumption — right here and now (or, well, yesterday). Or as Greenpeace put it succinctly last year: “Carbon ‘stored’ in trees or other ecosystems is not the same as fossil carbon left underground.”

So Packhelp’s talk of “sustainability” — whilst it’s simultaneously drumming up demand for and growth of emissions-generating on-demand consumption by providing the cheap packaging that enables scores of wasteful micro deliveries; not to mention its plan to make its custom packaging even cheaper so it can further grow orders — needs a lot more robust scrutiny than merely looking to see if there’s a recycled logo printed on the box to score its marketing claim on the greenwashing scale.

Or, to put it another way, fiddling round the edges of a terminally polluting system won’t avert climate disaster. Indeed, some might argue that by making claims of “sustainability” without delivering the kind of systemic change that will actually reduce consumption suggests you are — far from being sustainable — complicit in sustaining the current global catastrophe.

E-commerce and other online businesses are becoming increasingly global in their operations and customer bases, and a startup called Airwallex — which has built a banking solution that addresses the opportunity to provide cross-border financial services — has been seeing a massive surge of activity. To capitalize further on that opportunity, today the company is announcing growth funding.

Hong Kong and Melbourne-based Airwallex has raised $100 million, capital that it will be using to continue building out its banking and payments businesses into more markets, and to invest expanding its products.

The funding — which is being led by Lone Pine Capital, and joined by 1835i Ventures (the venture arm of ANZ, the Australia and New Zealand Banking Group) and Sequoia Capital China, all previous investors — is an extension to the company’s Series E that it announced only in September; and it brings the total of the round to $300 million.

The valuation is also being extended with this latest injection: Airwallex is now worth $5.5 billion (compared to $4 billion in September). From what we understand, the company was getting term sheets as high as $7 billion from outside investors (that outside interest was what prompted the round in the first place).

Airwallex today has around 20,000 customers spanning areas like e-commerce, tech/SaaS companies and professional services. It also has 500 large platform customers (Papaya Global and GOAT are two examples) that have embedded Airwallex’s services within their own services to power transactions for their own customers.

That business has seen a big boost of activity as a result of a few key developments in the world.

For starters, the Covid-19 pandemic has led to a big shift towards more e-commerce among both consumers and businesses. In turn, businesses have needed to extend their financial infrastructure to accommodate more customers. And because e-commerce has broken down the barriers of where you can do business, they’ve also had to extend their financial reach to touch customers in ever-wider geographies. Covid-19 has also massively disrupted supply chains, so businesses have also had to become more enterprising in how they manage these: they may now have to work with more partners, and potentially be agile enough to pay different people month-to-month.

All of these present the kinds of use cases that speak to the kinds of services that Airwallex offers. Jack Zhang, Airwallex’s co-founder and CEO, said that revenues at the company grew 100% in Q3 over Q2. Its annualized revenues in that most recent quarter were $100 million. “We had a target to achieve that at the end of the year, but we delivered it a quarter earlier,” he said.

It also means a number of other companies are also looking to serve this need: competitors to Airwallex across its different services include Stripe, PayPal, Revolut (via Revolut Business), and more.

Airwallex built its company originally around business banking — its thesis was that companies had a lot of banking options when it came to doing business in their own markets, but for those who worked across borders, it offered domestic and international accounts that worked as easily as domestic ones, along with card issuing, transfers and foreign exchange, payouts and so on. More recently, the company has moved into payments to complement that. The plan will be to add more services natively to that stack, as well as integrate with third-party providers by way of an app store that it is now developing. That will launch potentially next year.

Zhang also said some of the funds will be used for M&A, as part of the inevitable consolidation that we’re going to continue seeing in fintech.

“We’ve now raised $800 million in the last 6 years, with $600 million in the last two years, and we still have $600 million in the bank right now,” he told TechCrunch. “A very large part of that is going to be used for M&A purposes.” Features that Airwallex wants to have as a native part of its stack it might buy instead of building itself include subscription payments; software to automatically calculate stamp duty depending on the market where items are being sold; and more data analytics to help customers analyze their revenues better. “I think there will be consolidation in the next period. But it won’t be just two players. The [fintech] space is big enough for a dozen winners.”

And it looks like Airwallex is setting itself up to be one of those winners. Zhang confirmed to me that Stripe — which today is a key competitor of Airwallex’s — approached the company to acquire it around 2018/2019, when Airwallex was significantly smaller but already developing a strong presence in Asia Pacific, which is still its biggest market, even as Airwallex moves deeper EMEA and North America. (It would have been a big step for Stripe into the region, which is has instead taken on its own steam.)

Zhang said that another big fintech, currently valued at around $20 billion, also approached Airwallex more recently. Nothing has come of that, either — partly because Airwallex is now too expensive, he said.

“I think we are probably to big for others to buy us,” Zhang added.

As for what is coming next on the liquidity front, an IPO “is not on the agenda,” but is something that the company will think about potentially for 2023 or 2024.

“Airwallex’s achievements in the last quarter alone showcase the strength of the company’s business model and its unique ability to meet their customers’ evolving needs in a competitive digital payments market,” said David Craver, co-chief investment office at Lone Pine Capital. “The future is bright for Airwallex, and we look forward to helping its team unlock greater growth opportunities.”

Consolidation to have better economies of scale is one of the biggest themes in the world of e-commerce, and today a player in the world of online retail is announcing a large round of funding to double down on its approach to the concept. San Francisco-based Heyday — which buys up and then grows direct-to-consumer merchants and brands that have found initial traction, leveraging the Amazon marketplace — has raised $555 million, a Series C that it will be using to continue expanding its technology, investing in business development, and to buy up more assets. Specifically, it will also be opening deepening its engagement in Asia (with a seventh office in China); hiring more brand management experts and other talent; investing in more product development; and building out its marketing, supply chain, data science and M&A tech stacks.

The Raine Group and Premji Invest co-led this round, with previous backers General Catalyst, Victory Park Capital, and Khosla Ventures also participating.

Heyday competes against a large field of startups also raising huge amounts of money to follow their own Amazon marketplace roll-up strategies. Other big names out of the U.S. include Thrasio (which picked up a cool $1 billion in October) and Perch ($775 million in May). Heyday has been moving at a fast clip to keep up since being founded in 2020. This latest round comes on the heels of a $70 million Series B that was raised only in May of this year, with the total capital raised by Heyday to $800 million, a mix of equity and debt (Heyday did not specify the proportions of equity and debt in this latest Series C).

“Our pace is insane,” said Sebastian Rymarz, Heyday’s co-founder and CEO, in an interview. “We were born 16 months ago and are already crossing $200 million in revenues.” (That’s an annual run rate figure.) The company said its brands are currently growing at a rate of 64% year-on-year compared to the broader e-commerce market.

Heyday has never disclosed its valuation, and Rymarz would only say that this latest round was made at “a very good valuation.”

That lack of detail is intentional. “I don’t want the team thinking or me getting into my head that ‘we’ve won,'” he continued. “We’re only 16 months in to what we think will be a multi-decade journey. I don’t want to celebrate valuations at this stage.”

However, as a point of reference, Thrasio is now valued at about $5 billion; Razor Group out of Berlin was valued at over $1 billion last week; and Perch also is now in the 9-figure range. As with all of these, Heyday is also profitable on an Ebitda basis, Rymarz confirmed to me.

There are millions of third-party sellers using Amazon as their primary route to market, and Heyday and others like it have seized on a prime opportunity to target them: often, these merchants lack the capital or appetite to take their businesses to the next level of growth. At the same time, as Amazon and other marketplaces mature, there are more sophisticated ways and more technology that could be used in aid of improving how to leverage them to find more buyers for products, amid a pool of me-too brands that are also finding ways to game Amazon’s algorithms.

The pitch that Heyday makes is that it has built technology that evaluates this sea of merchants to identify the most interesting of them all. Rymarz said that for every 100 merchants it looks at, it might consider buying just one.

When Heyday buys these companies, and their intellectual property, the idea is that it reaps the rewards of doing that scaling itself. It does so by integrating the business into a larger platform to manage marketing and sales analytics, production and distribution, and retail channels; and by following the company’s initial trajectory to continue developing more products to take along on that journey.

Given the number of third-party merchants and the gating factors for them scaling, this has become an area ripe for consolidation, and so, unsurprisingly, it has also become an area ripe for competition among consolidators.

In addition to Thrasio, Razor Group and Perch, others that have recently raised both equity and debt for the same ends include Heroes, which raised $200 million in August; Olsam with $165 million; Suma Brands ($150 million); Elevate Brands ($250 million); factory14 ($200 million); as well as Branded, SellerX, Berlin Brands Group (X2), Benitago, Latin America’s Valoreo and Rainforest and Una Brands out of Asia. There are dozens more.

How Heyday differs from these others is that, at least up to now, it has focused not on quantity of merchants, but quality.

Rymarz said that Heyday currently has only 15 brands in its stable, compared to, say, 200+ for Thrasio and 150+ for Razor Group. Again, this is also intentional: “We have much larger brands, with five of them making up over 70% of our revenues.”

He positively bristles when Heyday is described a rollup play. “Amazon is a launchpad, and we are not an aggregator,” he said.

For competitive reasons, Heyday has never publicly disclosed any of the names of the brands that it owns, but they are products in categories like home and lifestyle. And the bigger strategy is not just to build up their profiles on Amazon but to extend to a variety of other channels, including placement in household-name brick and mortar chains. (Rymarz showed me several brands under the condition that I would not publish their names, but just so that I could get a better idea of what it owned. At least two of them gearing up to sell in stores like Target.)

Heyday’s pitch these days typically does not bring on any of the teams involved with the brands that it buys up (there are sometimes exceptions to that, Rymarz said), but it has been bringing on more people with extensive e-commerce experience into the team to build out its wider operation. In addition to hiring more branding and retailing teams, it has included adding a number of new executives, including a CFO (Navid Veiseh, previously at Amazon and Coupang); a CMO (Reema Batta, formerly of Opendoor and Expedia), and a chief administrative officer (Todd Heeter, formerly of Doma and Anixter).

It’s been interesting to see how so many investors have piled into the opportunity in the last couple of years. (Other big names that have been backing Amazon marketplace consolidators include SoftBank, BlackRock, Silver Lake, Target Global, Tiger Global and more.) Part of the appeal is that it gives investors a look into some of the massive e-commerce growth that we’ve seen over the last decade, in a landscape that has otherwise been dominated not by startups, but by big players like Amazon. That, of course, has become an even more acute opportunity in the last two years with the rise of Covid-19 and the accelerate shift we’ve seen to more people shopping online than ever before.

“We have been exceptionally impressed with Sebastian and his team, their vision, and commitment to operational excellence for the next generation of consumer brands,” said Jake Vachal, MD at The Raine Group, in a statement. “Heyday’s innovative approach to growing and incubating brands provides entrepreneurs access to leading technology, as well as deep-rooted expertise spanning operations and marketing. We are excited to be partnering with this team as they continue building a differentiated platform for quality, digital-first brands.”

Investors in this round said that Heyday’s particular approach was also a factor.

“Heyday’s differentiated strategy and world-class team stand-out in what is playing out to be one of the most explosive new industries,” said Sandesh Patnam, Managing Partner Premji Invest, in a statement. “We are excited to partner with the leadership team to help Heyday leave a mark on the e-commerce space.”

Philippines-based Plentina, a buy now, pay later startup focused on emerging markets, announced today it has raised $2.2 million. This brings the fintech’s total funding since it was founded in 2019, including a seed round announced in April, to $5.7 million. The latest funding was led by TMV, with participation from Global Founders Capital and returning investors AV Ventures, Techstars and Unpopular Ventures.

The new capital will be used to speed-track Plentina’s growth in the Philippines, expand its product and start exploring launches in other countries, including Vietnam. The company is targeting a Series A raise next year and will hire senior talent before then.

In addition to its BNPL platform, Plentina also plans to focus on other data-driven financial services (its co-founders, Kevin Gabayan and Earl Valencia, are data scientists whose combined work experience include positions at Google and Charles Schwab). The two note that the Philippines has a population of more than 100 million people, but less than 5% of access to credit cards.

The company says that in 2021, Plentina’s Android app downloads have increased by 500%, growing from 30,000 users to over 150,000. It plans to launch an iOS app early next year.

When Plentina launched in the Philippines last October, it initially focused on daily needs, signing partnerships with vendors like 7-Eleven and telecom Smart Communications. Since then, it has added more than 20 brands to its platform and more categories. These include necessities like food, groceries and education supplies, but also things like airline tickets, gaming and e-commerce.

Its merchants include e-commerce platforms and offline retailers, like Isetann Supermarket, Lazada, Zalora, Shopee, Agoda, McDonald’s, Philippine Airlines, Razer E-Pins and National Bookstores. The company says it has a waitlist of more than 20 brands waiting to onboard to its platform.

Plentina also added new loan terms. When TechCrunch last covered the company in April, its required repayment within 14 days. Now Plentina has extended its BNPL offers to three months, since it has options for larger-value items, like airline tickets and e-commerce purchases.

The company will start its international expansion next year. “We are guided by our mission to democratize financial services to emerging markets, so we are planning to expand to Vietnam in 2022,” Valencia told TechCrunch. “We will apply lessons in launching and scaling in our first market of the Philippines.” He added that Plentina has already recruited a leadership team in Vietnam to launch operations.

In a statement, TMV founder and general partner Soraya Darabi said, “Kevin and Earl are precisely the entrepreneurs we look to back as investors. They have the domain discipline to be focused on this audacious opportunity, the tenacity to see it through to success. We are enthusiastically partnering with them to bring robust financial services to the Philippines and beyond.”

Vimeo, the B2B video platform that spun out from IAC earlier this year, has made a pair of acquisitions aimed at building out the suite of features and tools it offers to businesses to create and run their own video strategies. The company has picked up short-form AI-based video creation platform Wibbitz; and Wirewax, which has built technology for marketers and other non-technical creatives to make objects in videos “shoppable” or linkable to other outside content.

Financial terms of the deals were not disclosed, but for some context, New York-based Wibbitz originally made its name as an Israeli startup that had built AI-based technology that automatically turned text into videos, a service that helped it raise around $30 million from investors that included a number of strategic backers (that is, customers) like the Associated Press, Bertelsmann, France’s TF1, and the Weather Channel, as well as traditional VCs like Horizons Ventures and Kima Ventures. London-based Wirewax, meanwhile, also had a strategic backer in the form of the BBC, and other investors included Passion Capital and the Plug and Play incubator. It had raised around $7 million. Both have large customers on their books.

Vimeo plans to keep both platforms operational and continue serving existing customers, which include the likes of Walmart, Disney, Google, and Nike for Wirewax and HubSpot, Bloomberg, Condé Nast, and Harvard University for Wibbitz. It is also planning to integrate its features into its wider video creation dashboard to over time sell a wider set of tools both to those customers and those already with Vimeo.

The idea behind the deals is to bring in more tools specifically targeting Vimeo’s larger enterprise customers, CEO Anjali Sud said in an interview, to provide more creative tools that are less technical to help them feed the video beast: video consumption has skyrocketed in the last couple of years, fueled in no small part by Covid-19 and people spending more time at home and on their screens rather than in public places.

That’s accelerated a lot of organizations’ video strategies, whether that involves providing tools for internal teams to get work done, or creating marketing campaigns, or building new products themselves.

“Companies are going from reactive to proactive, and employees are demanding it,” Sud said of the video push and how its customers are looking for more functionality in their video software. The knock-on effect for Vimeo, she added, has been to become a consolidator of many of the smaller video companies that have emerged over the years to address different aspects of the creation process, to make a bigger product that is easier to address that demand, with “several acquisitions helpful in expanding our product suite to create an all-in-one professional video solution. Our belief is that every startup has an interesting video feature to provide. We want to get every company using video every day, to get 1 billion knowledge workers using video. To do that you have to materially lower the barriers.”

It’s been a years-long strategy for the company, with other acquisitions including the purchase of Livestream, which it says now powers town halls and other live events (a platform that was expanded earlier this month by way of a new virtual events product); and Magisto, another short-form video creator tool.

Wirewax will be bringing more interactive video functionality to Vimeo, specifically with a drag-and-drop interface. One of the most obvious applications will be in the realm of e-commerce where users will be able to use the tech to build “shoppable” videos with links within the videos themselves to buying featured items; but other applications can be technical (eg to product demonstrations) or education (for further information about something in a video), or internal training for employees (for example links through to quizzes).

Wibbitz, meanwhile, is more focused on video creation, and specifically tools for marketing, internal communications and media teams to manage large amounts of video while keeping the content consistent with company branding and style. It also still offers a product for using AI to transform text to video automatically, although this is no longer the core service. Sud said that AI IP will be integrated into its existing products that also provide the same functionality (which it acquired via Magisto).

“Wirewax was built for the video-first future, evolving video to be a lean-in, fully engaging experience,” said Steve Callanan, CEO, Wirewax, in a statement. “Marrying Wirewax with Vimeo’s video leadership and global scale will put the power of next-generation interactive video into the hands of millions of users. It’s an exciting step to be joining Vimeo and contributing to helping organizations unleash their creativity and produce engaging experiences that drive better business outcomes, from shoppable videos to boost sales, to entirely new ways to improve training, education, and customer service.”

“Wibbitz and Vimeo have a shared goal of making video creation so simple that any employee can easily and quickly make beautiful, professional-quality videos at scale,” added Zohar Dayan, CEO, Wibbitz. “We have spent over 10 years honing our product to serve marketing, HR, and communications teams at some of the largest companies in the world, and are thrilled to join Vimeo’s world-class platform to accelerate the video transformation taking place across the enterprise.”

The pair of acquisitions nevertheless come on the heels of a mixed year for Vimeo. The company spun out as a public company from IAC in May, debuting at $57/share. However, it saw its stock dip on its first day of trading ending up with a market cap of $8.4 billion on its closing day. Today, its share price and valuation are more than halved, with a market cap of $4 billion. Some of the skepticism in the market appears to hinge on the fact that it’s spinning out into what has become a highly competitive space, with many a company with deep pockets also looking to address the same gap in the market for providing video services to businesses that want to do more in video.

Despite this, the fact remains that we have seen record-breaking levels for all kinds of video providers, from on-demand premium content companies like Netflix through to those focused as well on user-generated content like TikTok and YouTube, and those with more business focus, such as Zoom for conferencing.

That rising tide has also lifted 10-year-old Vimeo’s boat. The company posted quarterly revenues of $100 million in Q3 (it debuted in May with quarter revenues of $89.4 million). Sud tells us that the company now has “hundreds of millions” of free users and 1.6 million paying users (that latter figure is flat compared to May, when Vimeo disclosed 200 million free users).

Since its pivot to B2B four years ago, Vimeo’s customer base has settled on a pretty wide mix, ranging from SMBs through to startups and some 6,000 large enterprises including Starbucks, Amazon and Spotify. Enterprise revenues grew 60% in the last quarter compared to a year ago, figures that the company is holding in place as it looks to the future.

“We think in the long term of decades, not years,” Sud said.

The market for complementary and alternative medicine — a wide-ranging area that includes practice-based work like yoga as well as a huge range of supplements and everything in between — has been on a massive upswing , with the global industry valued at $82.3 billion in 2020 and growing at a fast clip in the years ahead.

Now, a company called Fullscript, which has built a wholesale backend and storefront builder to power the supplements businesses of alternative health practitioners providing these services, is getting a big infusion of cash to meet the opportunity. The Ottawa, Canada-based company has raised $240 million, funding that it will be using to continue expanding its business across North America, and developing more tools to serve its customers: practitioners building complementary and integrative treatment plans (bringing together both traditional and modern approaches) for their patients.

“We believe integrated medicine will be medicine in the future,” Fullscript co-founder and CEO Kyle Braatz said in an interview. “Sixty percent practitioners are already focusing on wellness and prevention. It’s more than just pharmaceuticals, and patients are doing more than just popping a pill.” The company today offers a stock of some 20,000 products from some 300 brands.

The investment is coming from HGGC and Snapdragon Capital Partners — respectively a mid-market firm more known for private equity investments and a firm that invests in primarily health and wellness businesses. Fullscript’s valuation is not being disclosed, but for some context, the company has been around since 2012 and had only raised about $25 million previously, growing largely by being bootstrapped. And one reason that it will have come to investors’ attention now is its financial track record on its own steam: it’s going to make $300 million in revenue this coming fiscal year, growing from a mere $40 million five years ago.

Fullscript is based in the same city as Shopify, and Braatz likened a little of what his company does in its own B2B2C model to what Shopify has achieved in the world of e-commerce.

Just as the latter has provided an easy way for companies selling online to build and operate their own web-based storefronts (a business that has been huge, and seen Shopify extending into a lot of adjacent areas as a result), Fullscript is addressing the needs of practitioners online.

Among Fullscript’s services, it helps them source supplements; set up and fulfill prescriptions for those treatments from Fullscript’s dispensary, either to pick up in their offices or have delivered to their homes; manage their patients’ bigger treatment plans through an integrated approach that brings data from these treatments into a patient’s wider electronic health records; and provide supplementary reading and other educational materials about the supplements that are being dispensed.

“Just as Shopify empowers merchants, we empower practitioners,” Braatz said. And just as Shopify has brought a number of different tools online for its merchant customers to build out their businesses on the Shopify platform, so too is Fullscript developing more technology to grow its proposition. That will include more analytics for its customers, more tools for patients to monitor their own progress and purchases, and so on.

Fullscript’s rise comes amid a much bigger push for online health services, and specifically those geared at selling medicines and supplements. That means more potential competition from Amazons of this world (Amazon being already a major destination for vitamins and other supplements), and more attention being paid to others like Ro trying to make headway in this space. But also a greater acceptance and understanding that the online component of this business is here to stay.

But it’s not all smooth sailing. Complementary therapies have been a mixed bag when it comes to general acceptance and usage of them.

On one side, consumers, and a widening pool of traditional and modern practitioners are increasingly looking at these alongside the pharmaceutical approach. But on the other, there are a few reason why that hasn’t been more mainstream. For starters, insurance companies do not always provide coverage for these treatments as they do for the more standard medical treatments. One of the reasons for this is that, for better or worse, pharmaceutical approaches are trialled, tested, approved by regulators and generally entered into a realm of acceptance that makes it more likely that an insurance company (or practitioner) will opt for those treatments. The same has not been the case for supplementary medicines, not least because some of the effects might be harder to quantify. And partly because of that, or even from direct experience, there are plenty of reputable skeptics when it comes to those effects.

Insurance is not part of the backend for the moment for Fullscript, and all of the payments for products are made by patients directly themselves.

In the defense of integrative approaches, however, there are plenty of reasons why consumers and the medical industry might also criticize the pharmaceutical approach, too (not least because it’s not 100% foolproof, the costs, the side effects and so on). Indeed, Braatz noted that attitudes towards integrative approaches are gradually starting to change, not least because of the many reasons that conventional approaches do not work perfectly.

“I think the whole integrative market is just starting to leverage insurance,” he said. “Practitioners starting to be compensated because compensation is evolving from volume to value-based. And we see hospital systems starting to build and acquire integrative clinics to keep patients out of hospital systems.”

That evolution, in effect, is as much a part of the investment strategy here as the current business is.

“We are long term believers in the Fullscript story, and we thought that its platform, the tech they developed, and the reviews of that we’ve seen of it from the industry, would be an exciting investment. There is a ton of potential,” said Bill Conrad of HGGC.

Apps that let people do virtually what they would have previously had to carry out in person have seen a boom in the last 20 months of pandemic living, and one of them today is announcing a big fundraise on the back of its own strong growth. Jackpocket, which currently has 2.5 million active users who use its app to buy tickets to play lotteries in 10 U.S. states, has picked up $120 million in a Series D round, funding that CEO and founder Peter Sullivan said it plans to use to expand from its core business of lottery ticket sales into a wider array of mobile gaming, and to take its business to more markets both in the U.S. and further afield, both on its own and in partnership with others.

“We expect by the end of Q1 to be in at least five other states,” Sullivan said, adding that technology investments are also on the to-do list, by bringing in more “best practices” from the worlds of e-commerce, subscriptions and mobile wallet services, alongside exploring other forms of gaming.

“What a lot of people don’t know about the lottery is that a percentage goes to good causes,” he said. New areas that Jackpocket wants explore include raffles, sweepstakes, bingo, social casino games. “We want to provide more fun game play and chances to win, and more ways to give back.”

This is what Jackpocket’s expansion strategy looks like according to its most recent pitch deck:

Left Lane Capital is leading the investment, with comedian Kevin Hart, Whitney Cummings, Mark Cuban and Manny Machado, among the individuals participating, alongside previous backers Greenspring Associates, The Raine Group, Anchor Capital, Gaingels, Conductive Ventures and Blue Run Ventures; and new backer Santa Barbara Venture Partners. (Jackpocket was founded in New York but also has an operation out of Santa Barbara, CA; that’s where CEO and founder Peter Sullivan is based and was speaking from when I interviewed him for this story.)

Sullivan said the company would not be disclosing its valuation with this round, which brings the total raised by the company to just under $200 million.

For some more context: Jackpocket last raised money only in February of this year, a $50 million Series C round, when it was valued at $160 million post-money, according to PitchBook data. But it has grown since then: its current 2.5 million active user figure is up 300% in the last eight months.

Sullivan said that the idea for Jackpocket came to him in part because of his father, who was, in his words, “a blue collar guy born in Brooklyn who played the state lottery in New York, but was computer illiterate.”

The year was 2012, and one of the big themes in the world of tech at the time was the rise of apps that were bringing previously-offline services into the digital world; another big theme was the surge of interest in mobile gaming. Putting those trends together, Sullivan saw an opportunity to build an app to order lottery tickets — something that typically required people to go into convenience stores that could be done instead from the phone.

“We positioned ourselves as the Uber or Instacart for lottery,” he said.

Jackpocket is part lottery ticket storefront, but also part virtualizer of the whole lottery experience. As Sullivan described it to me, people use the mobile app to order lottery tickets. At the back end, Jackpocket is doing the actual buying in advance, using proprietary software that it built to take “scans” of each ticket that the player buys. Players can see the ticket, which is watermarked by Jackpocket to keep it unique and authentic.

As with all kinds of other real-money online gaming, Jackpocket is built with various levers so that it complies with different regulations around age, geographical location (you have to be a resident of the state where you are playing). This includes using GPS technology to identify users’ locations, but also checks to determine whether people are using VPNs, or are tied to computers via other applications. Players also need to upload identification to verify themselves and their ages.

The company has also made a play for being a more “responsible” player in the gambling world. It monitors user spending and doesn’t let anyone spend more than $100 per day, or whatever limit under that amount they choose to set.

Its business model is based on taking a 9% cut on any transactions it makes itself. That means, if you put money into the app to buy tickets, you’re charged 9%, but if you use your winnings to play, you do not. Nor are you charged to withdraw money.

All the same, and even with a clear market opportunity (its biggest competition at the time was the fragmented convenience store market) the startup found it very hard initially to raise money.

“It was considered taboo to do real money gaming at the time,” Sullivan said of his experience of knocking on doors in Sand Hill Road in the early days, one reason why the company raised relatively little (around $25 million) before this year’s Series C. “Nine years ago investors wouldn’t talk to us, but I knew lottery would hbe the key here,” he said. “It is the largest amount of real money gaming, largest net and lightest touch point and it works well cross-selling it to other formats.”

The investment tide really started to turn on the back of the success of companies like FanDuel and other real-money gaming has changed the tune for lottery, and Jackpocket, too. The company cites figures from industry group North American State and Provincial Lotteries that estimate that the total annual spend from consumers on lotteries is $85.6 billion. This is more than the combined spend in several other leisure categories: print and digital books ($1.8 billion), movie tickets ($11.9 billion), video games ($31.5 billion), concert tickets ($10.4 billion) and sporting events ($17.7 billion).

“I saw my dad buy these tickets, but I never knew how big it was,” Sullivan said. And that’s not considering also the changing demographics of lottery ticket buyers, where some 70% of buyers are under the age of 45 years old. “It’s a more tech-savvy and affluent buyer,” Sullivan said, which also plays well into an app-based experience.

The past two years’ particular set of circumstances, meanwhile, has also given a big fillip to companies like Jackpocket, with the consumers who would have previously visited their corner shops to buy items like lottery tickets spending more time at home to socially distance and avoid the spread of Covid-19, and many of those small stores that remained open switching to delivery services, or making it generally less easy to pop in to buy tickets.

The “cross-selling” other formats, as Sullivan describes it, will be an important area to watch. It could be about selling other kinds of lottery-style experiences, but also potentially partnering with the companies like, say instant grocery delivery startups, which are the digital extensions of the convenience stores that have been lottery’s retail bread and butter up to now, or other gaming companies. That potential is one reason to raise so much right now.

“Mobile gaming and lottery is experiencing an exciting and unprecedented level of growth and expansion.  At Left Lane, it’s clear to us that Jackpocket is spearheading this progress and innovating at a pace never seen before in this industry,” said Harley Miller, founder and managing partner of Left Lane Capital, in a statement. “We were invigorated by the opportunity to take part in this historic moment and look forward to supporting Jackpocket’s role in this landscape.” 

Una Brands, the e-commerce aggregator focused on Asia-Pacific brands, announced today it has raised $15 million for its Series A. The full-equity round was co-led by White Star Capital and Alpha JWC, along with participation from returning investors and Ninjavan co-founder Alvin Teo.

This news comes only five months after Una launched with a $40 million equity and debt seed round. The startup has not disclosed the ratio of debt and equity (like many other e-commerce aggregators, Una uses debt funding to buy brands because it is non-dilutive). Co-founder and chief executive officer Kiren Tanna told TechCrunch the Series A is a priced round with a valuation more than five times Una’s last funding. Besides raising equity, Una also extended its debt facility size from Claret Capital.

“We have a very strong pipeline of brands across APAC that we are working on, and as we have done some deals already, we are seeing larger and larger brands that are approaching us,” said Tanna. The Series A was raised to accelerate the growth of its brand portfolio and Una’s operations, and it plans to raise further debt and equity, he added. The company now has 90 team members in seven offices across the Asia-Pacific: Singapore, Australia, India, China, Indonesia and Malaysia.

Unlike many other e-commerce aggregators that focus on Amazon sellers, Una describes itself as “sector agnostic” because of the number of marketplaces used across APAC, including Tokopedia, Lazada, Shopee, Rakuten and eBay. Una looks for profitable brands that make between $1 million and $50 million in revenue per year. After acquisitions, Una grows brands by adding new distribution channels or expanding them into new countries.

Since launching, Una has bought more than 15 brands, and says the first ones it acquired have seen a 50% increase in sales and profits. The average EBITDA of its acquired brands are about 26%, putting the company on a path toward profitability, said Tanna.

He added that Una is building technology to help its brands scale. Since most aren’t on Amazon and many are seller-fulfilled, sometimes from their homes, Una transitions them to its professional warehouse fulfillment infrastructure. Tanna said the company is building its own technology to get transaction-level data from multiple channels to integrate it into its ERP system and track operational performance.

In a statement, Alpha JWC managing partner Jefrey Joe said, “Digitally native brands in APAC is a secular trend growing at 4x the rate of those in the West. We believe Una’s value proposition will resonate with brands across the region and further propel the growth of D2C in countries such as Indonesia.”

ShopBack, the Rakuten-backed e-commerce loyalty platform, announced today it will acquire buy now, pay later startup Hoolah. Both companies are based in Singapore and operate in Southeast Asian markets. The deal was done in stock and cash, and terms were undisclosed.

After the merger closes, ShopBack will own all of Hoolah, but the BNPL service’s brand, app and website will continue to operate as before, ShopBack founder and chief executive officer Henry Chan told TechCrunch. The merger means new features will be added to ShopBack’s platform, evolving it from a loyalty app for e-commerce purchases to enabling transactions with BNPL options.

Other acquisitions ShopBack has made to build out its business include personal finance community Seedly and Ebates Korea.

ShopBack, which has raised about $126 million from investors like Rakuten, Temasek Holdings, EV Growth, EDBI and East Ventures, says it is now used by about 30 million shoppers across 8,000 merchants in nine Asia-Pacific markets.

Founded in 2018, Hoolah’s investors include iGlobe Partners, Accelerasia Ventures, Genting Ventures and Maximilian Bittner, the founder and former chief executive officer of Lazada Group. Its BNPL services give shoppers the option of paying for purchases in three interest-free installments. The company says it has been used by more than 250,000 shoppers and is available on 2,000 merchants in Singapore, Malaysia and Hong Kong.

You might have heard of ‘headless’ content management systems, whereby you can run a CMS without being locked into a front-end platform. Well a similar movement is coming to e-commerce.

The latest incarnation of this movement is the news that ‘Headless Checkout’ startup Rally Commerce Inc., has secured $6 million in seed funding. The wider idea here is to ‘decentralize’ e-commerce ecosystems by allowing merchants to decouple themselves from the likes of Shopify, et al. There’s also a twist. Rally combines headless commerce with a Web3 token approach, which – they claim – will allow a merchant to ‘own’ a piece of the network.

The funding round was led by Felix Capital, alongside Rainfall Ventures, Long Journey Ventures, Afore Ventures and Commerce Ventures.

The team behind Rally previously built CartHook, a checkout solution.

Rally says its checkout is platform-agnostic, allowing Merchants to replace their existing traditional checkouts with Rally’s, or build a headless experience, with Rally as the checkout and orchestration layer.

Jordan Gal, co-founder and CEO of Rally said: “Merchants are too often forced to accept the mediocre checkouts provided to them by underlying platforms, and app developers are subservient to the platforms they build for. We’re offering merchants a better conversion rate with higher average order value (AOV) and the freedom to build their businesses according to their needs.”

E-commerce is exploding post-pandemic after whole populations were forced onto online platforms, so anything e-commmerce is obviously benefitting.

Joseph Pizzolato, investor, Felix Capital said: “The headless commerce space is booming as merchants and investors recognize the potential to create seamless and unique customer experiences across all touchpoints. Companies like CommerceTools, Nacelle, Fabric and Bolt are revolutionizing the old e-commerce stack, driving record funding inflows and sky-high valuations. We see Rally in the same category.”

For context, Commercetools — a provider of e-commerce APIs that larger retailers can use to build customized payment, check-out, social commerce, marketplace and other services — recently closed $140 million in funding.

But Commercetools and Rally are not alone. Others include Spryker, Swell, Fabric, Chord and Shogun.

Amazon continues to be the 800-pound gorilla in the room for companies in the retail sector. Today, a startup called Fabric, which is building technology to help those other retailers — big and small — compete more squarely against that muscle specifically in fulfillment with robotics technology, “micro-fulfillment” centers and last-mile operations, is announcing $200 million in funding. It’s a big round at a big valuation — over $1 billion, Fabric says. The round underscores both the demand in the market and opportunity to challenge Amazon.

“As it is, we already have more demand than we can serve,” said Elram Goren, Fabric’s CEO and co-founder, in an interview, who has his sights set on where it might apply its technology next. “At the same time, we are seeing bigger opportunities beyond the proposition beyond our micro-fulfilment centers, how they interact in the network and the supply chain.”

Singapore’s Temasek — which participated in Fabric’s $110 million Series B in 2019 — led this Series C, with Koch Disruptive Technologies, Union Tech Ventures, Harel Insurance & Finance, Pontifax Global Food and Agriculture Technology Fund (Pontifax AgTech), Canada Pension Plan Investment Board (CPP Investments), KSH Capital, Princeville Capital, Wharton Equity Ventures, and other unnamed backers also participating. It has raised $336 million to date.

Fabric’s customers today include the likes of Walmart, Instacart, and FreshDirect, and Goren said the funding will be used both to continue moving deeper into the grocery sector, including helping them built out their own “marketplace”-style operations, as well as to bring its robotics and micro-fulfillment technology to other kinds of e-commerce retailers by expanding its network across the U.S. (where it is now based, out of New York) and Israel (where it originally started), and soon other markets.

“Essentially, we are using the same tech stack for both groceries and e-commerce,” he said in an interview. Part of that was out of practicality. When Fabric started in 2015, he said a lot of the company’s thinking was focused around groceries, since e-commerce penetration was very low, at about 1%. Now it’s a 10%, he added, a $1 trillion business. “A lot of our thinking is shaped by what we saw as the opportunity. But in time we learned the opportunity was a lot larger and we have relevance in other areas. It’s retail but more abstractly, we are building a new way to move things so that you can have a faster and more efficient way of getting them.”

E-commerce has been growing at clip for decades, but the trend accelerated drastically in the last two years, not least due to Covid-19 and the chilling effect that had on in-person retail. Citing figures from McKinsey, Fabric notes that the the 35% penetration that e-commerce had in 2020 (that is, the amount of sales that were transacted online versus in-person) was more than double the year before (16% in 2019), with a chunk of that growth taking place over just a few months (growth that had taken 10 years prior to Covid-19).

But although it’s easy enough — and getting easier all the time — for us consumers to find what we want, click on it and get it delivered to our doors, that flow hides a huge and complex set of processes. One of the less transparent of those processes is fulfillment, which can include receiving goods, inventory storage, pick-and-pack costs, kitting and other sorting services (bringing unrelated items together), customer support and more. Estimates vary widely for how much of a percentage fulfillment is in the total costs for a product sold online rather than in-store, depending on locations of fulfillment centers, size and amount of items, methods used to run operations and so on.

Fabric competes against other startups building technology to improve the fulfillment process, such as ShipBob, Byrd, and parcelLab, all of which have raised money this year. These newer players in turn are looking to get into a business that has otherwise been dominated by a wide range of third-party logistics and fulfillment (known as 3PL) providers in what is a fragmented and in some ways quite analogue market, relying on warehouses and teams of workers; and of course Amazon, which provides services to hundreds of thousands of third-party merchants through its FBA program.

Fabric’s robotics solution is key to how it differentiates on this front. It has built a vertically-integrated set of hardware and software that can be implemented in a customer’s own warehouses, or in its own, to automate the process of selecting, moving around, and packing items. Goren said that it reduces the costs of fulfillment operations by some 75%, meaning that it doesn’t remove humans from the chain altogether.

“There are some things that can only be done by humans,” he said. The plan is to continue to build its own hardware but also, over time, to explore how and where it might integrate with whatever bigger customers might already be using.

The micro-fulfillment, meanwhile, is a concept that is based around providing space to multiple tenants within a space where Fabric deploys robots to run it; but also potentially involves Fabric itself taking space within larger warehouses that it does not own itself. A typical micro-fulfillment center involves robots and humans at scanning and controlling stations; a 6,000-square-foot station can process up to 600 orders a day, including one-hour deliveries.

One big opportunity in delivery and fulfillment operations has been in better serving dense, urban communities, which represent demographics with disposable income, a regular need for shopping since domestic storage is more limited, and smaller geographic areas to cover more efficiently. This will also be a target for how Fabric expands, Goren said. Economies of scale in these markets also present a compelling case for more efficiency overall that has an impact in other ways, too.

“We believe the movement to local fulfillment presents an opportunity to make retail and e-commerce more sustainable, and we’re thrilled to partner with the leader in micro-fulfillment to make this vision a reality,” said Eric Kosmowski, Managing Partner at the Princeville Climate Technology Fund, in a statement. “By leveraging existing real estate with a small footprint in close proximity to end consumers, utilizing more sustainable packing materials, and minimizing shrink and waste through smart inventory management, Fabric’s micro-fulfillment centers could lower last-mile emissions significantly.”