Gorgias, which develops customer service tools for e-commerce companies, has raised $30 million in a new Series C round of capital, raising its valuation to $710 million.
Transpose Platform and Shopify led the round and were joined by previous investors Jason Lemkin of SaaStr, Rajeev Dham of Sapphire Ventures, CRV and Alven.
It’s been a few years since we announced the company, and its total funding to date is $72.4 million. In the year By the end of 2020, the company had raised $25 million in Series B funding at a valuation of $305 million. Gorgias founder and CEO Roman Lapeyre told TechCrunch in an email that the company was valued at $680 million before this round.
During Series B, it was supporting more than 4,500 stores with its technology, which brings all the channels consumers use to contact online stores into one feed for each company. This way, support tickets can be managed in a variety of ways, including live chat, email, phone, SMS, messaging apps, and social media.
Today, the six-year-old company has more than 10,000 online stores, including Princess Polly, Steve Madden, Olipop and Marine Lair, selling products on Shopify, BigCommerce and Adobe Commerce.
It has also grown to 245 offices in San Francisco, Paris, Toronto, New York City, Sydney, Belgrade and Charlotte.
Last year, LaPierre said brands are seeing ad spending on channels like Facebook and Google, in some cases five times their previous cost, “wearing that playbook thin.”
“Combined with ongoing supply chain issues and higher raw material costs, direct-to-consumer brands are feeling margin compression at both ends,” he added.
Instead, he believes that to succeed in this type of environment, “DTC brands need to generate more revenue from their existing customers” by improving the customer experience. Gorgias offers insights into how a DTC growth game can generate 44% more revenue for its e-commerce clients, Lapeer estimates.
Meanwhile, Gorgias has more than doubled in size since Series B, Lapeyre said. In addition to 10,000 online stores and 245 employees, it has doubled its customers and more than doubled its annual recurring revenue and valuation.
“The environment in which we operate has changed quite a bit,” he added. “The growth of e-commerce has slowed in 2020, which helped boost our growth to Series B, but it has never been a more important time to improve the customer experience of online stores. Low margins and high acquisition costs require businesses to capture more revenue from existing customers, and customer experience is central to that effort.
Even with all that growth, the company is tracking cash burn rates in this new economic climate. The company’s goals early on were to “continually hire and grow,” LaPierre said. But, he said, “He slowed down the hiring going to market, reviewed where we could cut costs and asked the team to be smarter about how we use the money on hand.”
In reality, Gorgias wasn’t planning on raising new venture capital anytime soon, but LaPierre said he jumped at the chance to work with the Transpose platform and Shopify.
The company will use the new funding to accelerate development of an Automation Add-on feature that can cut up to one-third of recurring support tickets by providing faster responses to customers. Online customer service has a new revenue aggregation feature coming soon that identifies customers who can generate additional revenue.
“Both automation and ticket prioritization will drive additional merchant revenue goals by better identifying consumers who are ready to buy and increasing conversion rates with proactive support – an innovation in the current help desk market,” added Lapay. “This is made possible by the volume of e-commerce-specific support tickets handled by the Georgias platform, which trains the company’s proprietary algorithms to identify the intent and automatically tag accordingly.”