Dawn Capital
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Dawn Capital

Engineering the headless e-commerce revolution: why we invested in Medusa

Co-founders Nicklas Gellner (COO), Sebastian Rindom (CEO) and Oliver Juhl (CTO)

Even as the pandemic-fuelled boom in e-commerce quiets down, the secular drivers behind digital commerce continue to push its volume up. Retail e-commerce is projected to reach $7.5 trillion by 2025 and B2B online commerce is a 4x larger market. Despite the breakneck growth of e-commerce, we are still in the first, or maybe second iteration of it. Online retail will continue to evolve and grow, as the next wave of the digital revolution — IoT, wearables, the metaverse — opens up new frontiers in mature and emerging geographies.

This growth and these new trends are showing the age of the existing infrastructure, and making new demands of the digital commerce tech stack. Legacy solutions like SAP are monolithic, expensive and painful to update, and the second generation — Shopify and others — has tested the limits of off-the-shelf functionality. You only need to search ‘Shopify hacks’ for videos of frustrated devs figuring out workarounds.

As retail becomes omnichannel and borderless, it needs the core backend to match. A future in which a crypto payment is routed through a customised Etsy storefront embedded in an instagram live shopping reel, so that a Thai customer can buy from a Dutch retailer fulfilled by a Chinese distributor, all with simultaneous translation across half-a-dozen time zones and multiple currencies demands a tech stack with a lot more flexibility.

This is the reality that Medusa, our latest investment, is building. The team’s mission is clear: to create a commerce stack solution that people who build things are actually excited to use. And having talked to the devs flocking to Medusa, the excitement is palpable.

Medusa is poised to lead a new era of headless e-commerce, with decoupled frontend and backend design, lightning-fast API connections, and best-of-breed microservices that can be integrated in moments. The separation of frontend and backend functionality allows designers and content managers to pair the modular core (functionality like checkout, payments and order management) with unique UX across channels, geographies, languages and brands. Prototypes and nested channels can be spun up, tested and deployed without threatening core build stability. Meanwhile, core functions become best-of-breed by default with effortless third-party integrations, all wrapped in an open-source format backed by a rapidly growing community.

Two things set Medusa apart from its peers. First, its product perfectly balances ease and composability. Eighty percent of a Medusa store build is available in off-the-shelf modules which can be deployed in minutes — yet, unlike Shopify, the other 20% is completely customisable. Second, it has been built with developers in mind. It is open-source, free, and JavaScript-native; Medusa is designed to seamlessly fit into developers’ workflow — to be something they actually want to build with.

This is as much a matter of business strategy as product fit. We have long believed that the fastest way to a market’s heart is through its developers, and Medusa’s numbers bear out that philosophy. In just a year, Medusa has already been number one on both ProductHunt and GitHub, with over 12,500 stars, 700 forks, and some 2,000 active devs. All without spending a single dollar of marketing spend.

Co-founders Sebastian Rindom (CEO), Oliver Juhl (CTO) and Nicklas Gellner (COO) all had successful careers in e-commerce — from software design to consulting at McKinsey — before coming together over their mutual frustration at being unable to offer their clients the solutions they really needed. Medusa itself was born out of the very real need to hack around the limitations of one of the existing monolithic e-commerce platforms in order to scale from two to fifty global markets and currencies. Seb and Oliver figured out how to do that in a way simple enough to be managed by a single frontend developer. The result was a 70% increase in conversion for the client in question — and Medusa was born.

We are thrilled to be participating in Medusa’s seed round alongside our friends at LocalGlobe and SeedCamp, as well as a stellar group of angels. We look forward to working together on their journey. Short term, the plan is to double the company’s headcount and double down on engaging with the developer community that has so far greeted Medusa with such great enthusiasm and invaluable feedback. Wherever headless e-commerce goes next — and 90% of enterprises who weren’t using this architecture in 2021 are actively exploring it now — Medusa has the potential to be at the head of the charge.

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