Wholesale marketplace Creoate raises $5m to rebuild the economy for independent businesses
- Creoate is the UK’s largest B2B marketplace with embedded finance led by a team that has worked at or invested in Farfetch, Ocado, Lyst, Swiggy and Deloitte
- It helps independent retailers buy sustainable and unique products from brands and wholesalers on a centralised platform that delivers more choice, better pricing, and more efficient logistics at a global scale
- The company now serves over 50,000 retailers in 10 countries, providing more than two-third of retailers’ monthly stock, and is set for 6x growth by the end of the year
- Its UK retailer network already consists of 4.5x more locations by door count than Boots, Marks and Spencer, and John Lewis combined and its software has helped eliminate up to 40% in costs, helping pass savings back to the community
- The round was led by Fuel Ventures with participation from Vinted founder, Justas Janauska and 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
LONDON, 03.08.2021: Creoate – the online marketplace on a mission to democratise wholesale by connecting the very best global sellers with independent retailers – has raised a $5m Seed round led by Fuel Ventures with participation from Vinted founder, Justas Janauskas.
Having seen first-hand the pain-points that surround the current wholesale ecosystem, and just how damaging these are to local businesses, Creoate’s founders Ashley Horn and Fahad Khan wanted to build a community that puts local, high-quality, sustainable products in the hands of discerning consumers worldwide. A community that’s powered by a network of independent businesses, on a platform designed to reclaim the supply chain from global giants, all underpinned by Creoate’s unique data.
The size of the Seed round – which is twice the average in Europe – is validation of this vision of a post-pandemic economy built by independent businesses.
By leveraging artificial intelligence and predictive analytics, Creoate helps retailers forecast which products will fly off its virtual shelves in order to buy and manage inventory levels as efficiently as possible. Since launch in January 2020, this advanced platform is being adopted at an exponential rate despite widespread retail lockdowns, with more than 25,000 retailers having signed up in the past 6 months alone — a 1,600% year-over-year increase. Retailer adoption has increased to 7,000 a month over the last three months and is set for 6x growth by the end of the year as economies open up further.
Creoate’s 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. Creoate is live in 10 countries including the UK, France and Netherlands and its UK retailer network alone already consists of 4.5x more locations by door count than Boots, Marks and Spencer, and John Lewis combined.
Independent retail is everywhere
For every £3 made from the sale of goods in the UK, a third comes via an independent retailer. Independent businesses contribute £504 billion to the wider economy, selling goods that make up the largest share of consumers’ wallet at 19%. To put this into perspective, this share is more significant than that spent on transportation, which sits at 13%.
Run by residents who have lived in the areas they serve for many years, they know their customers’ names, and what values they care about. They play a key role in distributing life essentials and consumer goods, they’re a venue for social experiences and they proved a lifeline for many during the pandemic. They connect with their extremely loyal and engaged customer base via social networks and provide highly unique, hyperlocal services. The kinds of social ties and embedded distribution networks that big companies are desperate to mimic yet struggle to replace.
Yet, independent retail suffers from many structural inefficiencies.
“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”.
Building a better economy
Creoate acutely understands this. Not only is it led by an experienced team who have worked at or invested in Farfetch, Ocado, Lyst, Swiggy and Deloitte, but this team grew up in families that owned retail businesses. They represent the diversity of the brands and retailers on the Creoate platform and have seen how expensive and exclusive the current, broken system is.
Using their experience building financial products for SMEs and running retail shops, Ashley and Fahad 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.”
The data and analytics that underpins Creoate’s unique offering
To empower its retailers, Creoate has built a suite of B2B software tools for brands and wholesalers which make them instantly wholesale ready. B2B trade is complex, yet using Creoate’s software brands and wholesalers can start selling in just three clicks, without having to rely on pen and paper or having to go through multiple layers of middlemen. Creoate’s software has helped eliminate up to 40% in middlemen costs, helping pass savings back to the community and creating more transactions than ever before.
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. Instead of relying only on data from traditional sources like bank statements, which tell an incomplete story, Creoate’s data engine, Bifrost, uses proprietary marketplace data to make instant payment decisions for each retailer. This removes the pressure of retailers having to negotiate terms with multiple intermediaries like large-scale banks and third-party lenders. Many of which refuse to offer sustainable payment terms to smaller businesses in this way. And it means retailers can more quickly, efficiently and accurately respond to changes in demand from customers and move to an on-demand inventory model.
During severe economic hardship when Covid-19 shut down supply routes for most essential products, independent retailers relied on Creoate’s real-time, on-demand supply platform to buy essential supplies such as hand sanitizers and face masks. Creoate’s alternative supply chain network to traditional wholesale allowed retailers to serve local community needs within days, not months.
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. When Jenny McCann, owner of Bear Bookshop in Bearwood, launched her bookshop, she 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.
What’s more, having access to Bifrost’s unparalleled data looking across tens of thousands of shops, retailers like Jenny 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. The more data that flows through Creoate’s platform, the smarter Bifrost’s decisions get, helping build at scale one of the world’s most comprehensive data maps of the retail industry.
“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 in order to partner with even more businesses and offer even more market-leading, game changing features.
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- Source: ONS 2019 Census Data
- Source: ONS Population and Community Research
Creoate helps millions of small businesses grow on better terms. As the UK’s largest B2B marketplace with embedded finance, Creoate helps independent retailers buy sustainable and unique products from brands and wholesalers on a centralised platform. The platform leverages artificial intelligence and predictive analytics to help retailers forecast sales and manage inventory levels as efficiently as possible and get sustainable payment terms. All with the aim of delivering more choice, better pricing, and more efficient logistics at a global scale. Founded in 2020, the team is led by Ashley Horn and Fahad Khan, a pair of retail and finance experts, and a seasoned team who have worked at or invested in Farfetch, Ocado, Lyst, Swiggy and Deloitte. The company serves more than 50,000 retailers in 10 countries. Learn more: https://www.creoate.com/
About Fuel Ventures:
Fuel Ventures is one of the most active early and growth stage investors in the UK into leading fast growth technology businesses. Fuel Ventures invests in the most ambitious entrepreneurs in the sectors covering globally scalable marketplaces, platforms and software (SaaS), investing in the next wave of potential 100x return globally scaleable tech companies.