Vancouver-based sneaker community startup SoleSavy has raised over $15.5 million CAD ($12 million USD) in Series A financing to help more sneaker enthusiasts connect and navigate the sneaker-buying experience.
The all-equity round was led by Bedrock Capital. The Series A investors also included Diplo, Jason Calacanis’s LAUNCH, Dapper Labs’ CEO Roham Gharegozlou, and Shopify President Harley Finkelstein. Origin Ventures, Panache Ventures, Bessemer Ventures, and Turner Novak’s Banana Capital participated in the round as well.
Jeff Lewis of Bedrock and Jason Calcanis are set to join the firm’s board of directors as part of the round, which brings SoleSavy’s total funding to date to around $18 million CAD ($14.5 million USD).
“We’re there to help the people and fight for the people, and there’s no other company like us.”
-Dejan Pralica, CEO
SoleSavy’s co-founder and CEO Dejan Pralica told BetaKit that after building a dedicated user base around its subscription Slack community and original content, SoleSavy is ready to use its fresh capital to fuel the launch of a peer-to-peer sneaker marketplace and to expand into new countries.
These moves are part of the company’s aim to help sneakerheads navigate today’s bot-driven, exclusive sneaker purchase experience. SoleSavy is looking to build a large, dedicated community it can then take to brands and companies to help their “most loyal” customers access products first.
“We’re the champions, we’re the Robin Hood, we’re the Batman, whatever analogy you want to make,” said Pralica. “We’re there to help the people and fight for the people, and there’s no other company like us.”
The Series A round, which closed in March, came only a few months after SoleSavy secured an initial seed round of $2.5 million CAD ($2 million USD) in December. Following this funding, SoleSavy said it experienced a threefold increase in membership and a 200 percent increase in revenue.
Founded by Pralica and Justin Dusanj in 2018, SoleSavy attempts to tackle “the biggest problems plaguing the footwear industry” by leveraging what the company calls “the passion of the sneakerhead community.” These problems include bots, which buy up exclusive, highly sought after sneaker releases and resell them at inflated prices, forcing sneakerheads to pay more on the resale market.
Analysts predict the lucrative sneaker resale market could grow to $30 billion by 2030. In this environment, enterprising individuals have thrived by building bot-based businesses focused on buying and reselling sneakers, and sneaker resale marketplaces have emerged for them to sell them on, like StockX.
Through its mobile app and subscription-based community Slack groups, SoleSavy aims to make it easier for people to get and enjoy sneakers that are difficult to acquire at retail. Through SoleSavy’s digital channels, which are currently available to North American users, the startup informs members with accurate information, direct purchase links, and time-sensitive alerts regarding new releases. According to SoleSavy, since its launch, the company has maintained a 90 percent daily active user rate.
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Pralica referred to himself as a sneakerhead, adding that he currently owns about 500 pairs of sneakers. Around 2017, the CEO said he had become “very annoyed and frustrated by what was happening in [the sneaker-buying] space,” highlighting “the rise of reselling and exploitation of consumers.” With SoleSavy, he and Dusanj set out to address this issue.
“Sneakers used to be about the people, used to be about the culture,” said CEO. “Now the culture is about the asset class, which is the sneaker to be resold for a profit, and it’s being exploited by bots, and it’s being amplified by the frictionless nature of buying and selling on StockX and [other resale platforms], essentially.”
“Their rise as companies to multi-billion dollar valuations now has coincided with the deteriorating fun of being a sneakerhead,” said Pralica. “Now, when you want something, you look at and go, ‘well, that’s gonna cost me $100 more than it actually says.’”
“I cannot emphasize enough how hopeless it is right now to be a sneakerhead without us,” said Pralica. “Because if stuff is selling out in 45 seconds, you need every second you can get.”
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“We have 8,000 customers who really love us and appreciate us and are the foundation of the company, and now it’s a matter of building out the rest of the company for them,” said Pralica.
SoleSavy’s strategy involves three components: an online community, original content, and a peer-to-peer marketplace it aims to launch this October. Pralica said these pillars will allow the startup to serve its customers during all aspects of the sneaker-buying journey, from thinking about shoes, to talking about and actually buying them.
Pralica said SoleSavy doesn’t plan to implement any fees on this marketplace aside from a credit card processing fee. “I’m trying to build a social marketplace,” said Pralica. “We just want to be the conduit to a smooth transaction between two people who are passionate about something, versus thinking about, how do we extract more money from them?”
The CEO said the startup is still considering the pricing structure of its subscription model, as it looks to determine whether users will pay a single fee to access SoleSavy’s community, content, and marketplace, community, or individual ones.
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For SoleSavy, its subscription fees are the primary driver of the company’s revenue. Affiliate marketing also comprises a small component (about 10 percent) of revenue. Going forward, SoleSavy plans to continue focusing on growing its subscription-based community of users.
Pralica said SoleSavy grew to $1 million in annual recurring revenue (ARR) with a team of nine, and has already used some of its Series A capital to nearly double the size of its team, growing to 37. By the end of the year, the CEO expects the company to expand to 50 employees.
SoleSavy reports having $33,000 USD in monthly recurring revenue (MRR) as of last March, $100,000 MRR in November, and currently sits at $250,000 MRR. Pralica said its business benefited from the pandemic lockdown as users were unable to shop for products in person, adding that its growth was also spurred by growing frustration with sneaker-buying bots.
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SoleSavy draws in some of its users through its original content, which comes in the form of written feature stories, podcasts, and soon, video. The company just hired Tony Mui, former senior executive producer at Complex Media as its director of video to spearhead its video content efforts.
Pralica sees content as a revenue driver and customer acquisition engine for SoleSavy, adding that although the startup has also done some sponsored content, it has been “very strategic” about its approach, focusing predominantly on producing editorial, news, and opinion content.
The startup aims to have its three pillars in place by the end of 2021 so it can then decide whether to double down on sneakers or expand into other verticals in the consumer products space. SoleSavy focused initially on sneaker fanatics, but plans to branch out in the future to serving sneaker enthusiasts and casual sneaker fans through tiered subscriptions.
SoleSavy is currently available in Canada and the United States. The startup has plans to expand to other countries including Singapore and Australia. “We’re gonna expand [internationally] because, ultimately, it’s … ‘are you passionate about sneakers? Then we’ll have a home for you,” said Pralica.
Feature image of Justin Dusanj and Dejan Pralica, courtesy of SoleSavy