An online marketplace aiming to democratise access to wholesale goods for independent retailers has raised £3.6 million seed funding.
Creoate leverages artificial intelligence and predictive analytics to help retailers forecast which products will fly off its virtual shelves in order to buy and manage inventory levels as efficiently as possible.
The seed round was led by Fuel Ventures with participation from Vinted founder Justas Janauskas.
Since launch in January 2020, more than 50,000 retailers in 10 countries have joined the platform. Its team has similarly grown four-fold in the last six months to meet demand and is on track to more than double by the end of 2021.
“Sourcing brands as an independent retailer is close to impossible, an experience I went through myself when running a multi-brand retail shop in London,” said Creoate co-founder Ashley Horn.
“There are over 30 million brands on Instagram and it’s getting cheaper to launch a new product, but knowing what to buy as a retailer is extremely risky, expensive and time-consuming.
“To make matters worse, all the banks I talked to didn’t want to finance inventory so we were turning to expensive credit cards with 18-30% rates just to pay for goods.
“It felt like the barriers were so high for an independent business to thrive even though there was so much demand from consumers. We could see that this system was not sustainable and there had to be a better way.”
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The startup is led by an experienced team who have worked at or invested in Farfetch, Ocado, Lyst, Swiggy and Deloitte, and also grew up in families that owned retail businesses.
Using their experience building financial products for SMEs and running retail shops, the founders say they unlocked marketplace liquidity by completely removing the sourcing and finance problem for both brands and retailers. Each brand on the Creoate platform is then personally curated by an in-house team of buyers to make sure they come from a group of diverse, representative, inclusive, creative and skilled businesses from all corners of the country.
“For as long as Mom and Pop shops, like those run by my family, have existed, they have been faced with poor information, discriminatory pricing and unpredictable cash flows,” said co-founder Fahad Khan.
“I saw first-hand working in financial services how little data is used today to make inventory decisions, which locks out millions of businesses from financial inclusion. That’s where we believe technology can add the most value, by empowering businesses to be more resilient and make better money.
“By focusing on how inventory is bought and financed, we are building an omni-channel future where offline consumer shopping brings the best out of online business-to-consumer commerce. It’s not one or the other.”
Creoate has built a suite of B2B software tools for brands and wholesalers which allows them to start selling in just three clicks, without having to rely on pen and paper or having to go through multiple layers of middlemen.
Once a retailer has joined the Creoate community, it can browse and buy wholesale items from handpicked brands, as well as get access to Creoate’s proprietary payment terms. Its data engine, Bifrost, uses proprietary marketplace data to make instant payment decisions for each retailer.
The platform is also accelerating growth of the value-based economy, with the most popular categories on the platform being Fair Trade and Eco-Friendly. It cites the example of Jenny McCann, owner of Bear Bookshop in Bearwood, who turned to Creoate for a one-stop-shop solution in sourcing brands and products that nurture creativity and fit her paper-based, plastic-free ethos.
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Creoate says retailers like McCann also get recommendations about which products are likely to be the most popular among their specific demographic. They can determine what price points these products are most likely to sell at, what their current customer base are searching for, how best to appeal to new consumers and more trend-led suggestions.
“Unless you’re in the world of retail, it can be difficult to truly grasp just how broken the system is for the 2.5 million retailers and 30 million emerging brands that Creoate serves,” said Mark Pearson, founder and managing partner at Fuel Ventures.
“We are captivated by Creoate’s technology which is inspired by the founding team’s real-world experience and empathy. Creoate’s incredible growth, despite a severely challenging economic environment is clear evidence of the must-have value it provides to independent businesses.
“We at Fuel Ventures only invest in super ambitious hard-working founders and companies that have large global scale potential and with Ashley and Fahad, this is exactly what we have found.”
The funding will be used to further grow key go-to-market teams, double down on traction in Europe and add more advanced tools and analytics to the platform.