June 6th, 2012

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Venture Capital Funding for Internet Retailers

Internet retailers that have figured out the E-Commerce market are being handed bags of cash from venture capitalists.

Well, hold on their partner, VC’s are not giving money away just to anyone.  They have a set of metrics and criteria they follow when evaluating an E-Tailer.

Here are some key factors that they are looking at when evaluating E-Tailers:

  • How fast are you growing?
  • What are your month-over-month growth rates?
  • How disruptive is your company in your market and to your competitors?
  • How addictive is your company to your customers?
  • Who are your employees (employees are the cornerstone of your company)?

In addition, having the right lawyers also matters a lot.  Lawyers that do not have enough experience in the venture capital process actually help to slow down the progress, but experienced lawyers in this area not only speed up the deal but also help find the right VC’s for you.   Having a great lawyer is a big plus when shopping for venture capital funding.

E-Tailers have raised hundreds of millions of dollars in funding.   For example WhaleShark Media Inc., who operates coupon and deals sites, raised $300 million in funding since 2009.

On a related note, when a retailer (Internet and brick and mortar) becomes successful with a track record of fast growth, private equity firms are another option for a cash injection.   Such is the case with Thomas H. Lee Partners L.P., a private equity firm, who infused $2.69 billion recently into Party City.  The injection of cash is to scale Party City’s ongoing growth in their vertical.

At BeeSeen, we have helped E-Tailers crack the E-Commerce code with growth rates and ROI’s of over 500% through our experienced team of E-Marketers.   Several of our clients have been acquired by industry leading companies.

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