Doubling Down on the Future of Commerce: Our Investment in ChannelEngine

Laura Waldenstrom
Inkef
5 min readJan 19, 2021

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We are humble and beyond excited to partner with the talented team of ChannelEngine and its exceptional founder, serial entrepreneur, Jorrit Steinz. We are looking forward to joining them on their journey towards becoming the global market-leading platform for distributed e-commerce.

The e-commerce revolution has only just started

Few people can have missed the explosion of online shopping during the last decade (perhaps with the exception of the Swedish prime minster…😊). Global e-commerce sales grew by more than 500% in the 2010s, reaching $3.5 trillion in 2019, and has created huge opportunities for entrepreneurs riding this wave. Building solutions to help brands sell online has turned many start-ups, including Shopify, Stripe and Wish into unicorns, and attracted billions of dollars of venture capital.

As early stage investors, we are not chasing yesterday’s headlines but we are on the hunt for the breaking news of tomorrow. Despite being one of the most well-funded sectors within tech, e-commerce is far from plateauing. It is still at its infancy when looking at the penetration of the total retail market (16% in 2019), but is continuing to grow, faster than ever, as brands across the globe are finally taking the leap to go direct-to-consumer (D2C). Last year, the pandemic further accelerated the shift to e-commerce, reportedly by up to 5 year. Only within the next four years, the e-commerce market will have doubled from 2019 figures. The continued shift and rapid growth are opening up opportunities for whole new breed of start-ups, which is why we are doubling down on the “Future of Commerce” at Inkef, and delighted to have been given the opportunity to lead the series A round of ChannelEngine.

Marketplaces are dominating e-commerce, and ChannelEngine is the spider in the web

Our investment in ChannelEngine is predicated on our strong belief in the team’s view of where the e-commerce market is going: marketplaces are taking over e-commerce (currently accounting for the majority of total e-commerce revenues) and as a result, a rapid fragmentation of the marketplace landscape is currently taking place. This goes from:

1. Large retailers turning into marketplaces (e.g. Walmart, Ahold Delhaize);
2. Entirely new marketplaces (e.g. specialized on specific categories) emerging;
3. (Social) Media platforms morphing into transaction-based platforms (think of, among others, social commerce on Facebook and Instagram, the emergence of livestream shopping and last but not least Pinterest’s push into the space);
4. Comparison-shopping sites (lead generator models) turning into marketplaces;
5. The emergence of online B2B marketplaces creating a paradigm shift in the workings of wholesale commerce (e.g. Alibaba Wholesale, Faire, Ankorstore, Orderchamp and several others).

In short, it is our conviction that, in the coming years, every demand-generating platform will turn into a transaction-based platform with marketplace characteristics. All these channels need to be managed continuously and in real time, stock needs to remain synchronized, (pricing) campaigns need to be planned, results analysed, and forecasts are to be made etc. This is where ChannelEngine comes into play. Through a single powerful solution, it connects its customers’ backend systems (e.g. ERP, PIM, WMS, etc.,) to international marketplaces and sales channels.

ChannelEngine’s ambition is to become the market leading platform for distributed e-commerce and the de facto operating system of the e-commerce and marketplace teams within brands. A critical tool used to plan and optimize sales, minimizing time, and maximizing profit and reach, across all of the aforementioned channels. Brands such as JBL, Bugaboo, Staples, and hundreds of more have already decided to rely on ChannelEngine to automate and manage their sales on international D2C channels.

Key reasons to invest

Besides the massive and fragmented market, we saw the following key reasons to invest:

User-friendly and competitive product: just like the way Stripe was launched in a largely red-ocean market and conquered the world of payment through its user-friendly API-based implementation approach, ChannelEngine’s (although operating in a largely greenfield market) true differentiation towards competitors lies in the philosophy the company and platform is built on: it should be easy and smooth, to use and integrate with the platform for all parties, be it customers (connecting existing system and managing multiple sales channels), sales channels (connecting to the platform via open APIs) or partners (selling, onboarding and supporting customers).

Leveraging multiple layers of growth: as a true symbiosis, ChannelEngine grows with its customers and, as such, benefits from all factors that jointly contribute to customers’ GMV growth: (1) e-commerce market growing as a whole, and customers’ online sales is continuously replacing offline channels; (2) increased awareness and adoption of marketplace integration tools, as customers are starting to sell via marketplaces and the number of marketplaces is growing; (3) existing customers are using ChannelEngine as part of their international expansion strategy, entering new markets through marketplaces ChannelEngine is integrated with in those geographies.

Strong commercial traction and capital efficient growth: the famous hockey curve growth is something that excites all investors. With limited funding, ChannelEngine has realized a remarkable growth over the last two years, which was fuelled further by the pandemic’s impact on e-commerce, given the market a big boost as a whole.

Talented team with high execution power: “the team” is of course one of the most important investment criteria for any early stage VC. One of the things that impressed us the most with the ChannelEngine team, and how they are running the business, is the data driven execution and high level of business automation. When we first got a glimpse of their BI, it was like stepping into a candy store for us as investors. Automating operational procedures, has enabled high capital efficiency, at the same time giving employees more time to focus on their core tasks.

We are really looking forward to start working with Jorrit Steinz and his team. As a seasoned serial entrepreneur in the e-commerce space, Jorrit has already several successful exits under his belt. His track record of scaling companies is reflected in his leadership style and his deep domain knowledge drives a very compelling product vision that we at Inkef very much subscribe to.

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Laura Waldenstrom
Inkef
Editor for

VC Investor at Earlybird - based in London, made in Stockholm.