Booming ecommerce sales have made a unicorn out of a Utah-based startup that helps companies manage their sales on Amazon.com Inc. and other digital marketplaces.
Pattern Inc., which started out selling fridge magnets and other trinkets on Amazon’s third-party marketplace, on Wednesday said it raised $225 million in new outside investment at a valuation of about $2 billion.
Founded as iServe Products in 2013, the company quickly moved beyond selling its own wares, joining the growing ranks of outfits that build software to manage and analyze online listings and operate warehouses on behalf of clients.
Online marketplace sales, once the domain of mom-and-pop inventors and scrappy importers working out of garages, has become big business in recent years. Investors frustrated by the challenge of finding the next Amazon have instead started bankrolling companies poised to benefit from the largest online retailer’s rise. Investment banks, venture firms and private-equity shops have pumped billions into so-called ecommerce aggregators, which roll up online brands and seek to boost their sales and achieve economies of scale.
Pattern occupies a related niche, serving as an advisor and sales agent for other companies. The firm now generates most of its sales by managing a portion of brands’ ecommerce sales, buying products wholesale and selling them online. Clients include Nestle SA, Panasonic Corp. and Yogi Tea Co.
Pattern says it’s among the top five third-party sellers by revenue on Amazon. It also operates on most other significant online marketplaces, including eBay, Walmart, Alibaba’s Tmall and JD.com, and employs its own in-house designers and brand studio.
David Wright, Pattern’s chief executive officer, said the company plans to invest the new funds in international expansion and technology, among other projects to capitalize on the global surge in ecommerce sales during the Covid-19 lockdown.
“There are a lot of behaviors that won’t go back, post-pandemic,” he said in an interview. “That’s why we’re doubling down.” The company is also considering launching or acquiring its own brands.
Pattern, which says it has been profitable since its founding, generated about $500 million in revenue in 2019, and Wright said the company is on track to more than double that next year.
Based in Lehi, Utah, the company has about 950 employees and operates in 18 countries. Wright co-founded the business with Melanie Alder, who is now the company’s chief investment officer. The two married in 2018.
Pattern’s Series B funding round was led by Knox Lane LP, a San Francisco firm, and included new contributions from existing investors.Favorite