GroupBy is a leading retail industry data-driven eCommerce platform offering data enrichment, advanced search, merchandising, and world-class analytics. Helping transform shoppers into buyers by fusing findability with personalization, the company counts some of the world’s leading retailers, including CVS, Estée Lauder, and Urban Outfitters, among their customers.
GroupBy first met Espresso Capital shortly after opening its doors in 2013. At the time, the company was heavily investing in R&D and needed additional capital. A loan from Espresso provided GroupBy the necessary funding to continue investing and was repaid upon receipt of the associated tax credit refund.
A year later, when GroupBy needed funding, it selected a competitor to Espresso, which unfortunately didn’t turn out very well. “We paid off that other firm in just seven months because we wanted out of the relationship,” GroupBy CEO Roland Gossage says. “After a great initial experience with Espresso, we found working with this other firm to be onerous and not much of a partnership.
Aside from these fundings, GroupBy was almost entirely bootstrapped, save for some seed funding from friends and family. Then, in 2017, the opportunity presented itself to acquire a company with complementary functionality. It was then that Gossage and his team realized that they were going to need outside funding to make the acquisition a success. “Without outside capital, a deal like this would have put a huge strain on our business,” Gossage explains. “It would have made things too tight and uncomfortable and we simply didn’t want to put ourselves in that position.”
Venture debt powers a crucial acquisition
The acquisition was funded using a combination of cash and equity. For the cash funding portion, GroupBy looked to Espresso for help, recalling the positive experience from their initial loan. “Espresso was so easy to work with that going back made a lot of sense,” Gossage says. “They’re just great people and really know their stuff.”
Fast forward to today and the now completed acquisition has transformed GroupBy, allowing the company to improve its competitive positioning and win more deals. Today, 20 percent of GroupBy’s revenue comes from the acquired business. Not only that, the acquisition is one of the reasons why GroupBy has been doubling its revenues for the past four years.
GroupBy is now poised to continue to grow organically as well as through additional acquisitions, and has built up its enterprise value while limiting dilution of its shareholders in the process.
A relationship that’s more than just financial
Gossage says he found working with Espresso easy, productive, and personal. “I like that everything is straightforward and transparent,” he says. “With Espresso you have very honest conversations, the team is easy to work with, and there’s no friction. It’s a very natural relationship that quickly evolves into a true partnership.”
Gossage says it wasn’t just the financing that has been beneficial. Espresso also constantly found other ways to help, such as introducing GroupBy to members in their network and offering advice. “They were always trying to find ways to add value,” Gossage adds. “Seeing opportunities to help us manage our costs, pointing out areas where we could work on increasing our enterprise value — there was always something.”
While GroupBy has already paid off its line of credit, its relationship with Espresso continues. Espresso has made introductions that might lead to future acquisitions. And while GroupBy doesn’t have an immediate need for further funding, Gossage says he wouldn’t hesitate to use Espresso in the future if the need arose. “Venture debt is a great option and Espresso is an even better partner.”
Unlike other experiences we’ve had and have witnessed in our space, this theme of partnership continues not only when things are humming along, but also when times are challenging,” he says. “That’s important because when challenges inevitably come along, you want someone who will continue to look out for both parties’ interests and not just their own.”
“With Espresso you have very honest conversations, the team is easy to work with, and there’s no friction. It’s a very natural relationship that quickly evolves into a true partnership.”
Roland Gossage, CEO, GroupBy