Toronto-based Maropost, which offers a customer engagement platform that aims to help companies with commerce, marketing, clienteling, and referrals, has acquired Australia-based Neto for $58 million CAD ($60 million AUD).
This acquisition is the latest development in its push into the e-commerce market.
Maropost was founded in 2010 by chairman and CEO Ross Andrew Paquette, who claims he bootstrapped the startup until 2016 to $30 million in revenue. The CEO said the company has doubled its annual growth each year since its founding and is currently generating $50 million in annual revenue.
Maropost’s goal is to help companies increase customer engagement and improve the customer experience. It does this through its suite of products, which offer various tools and solutions, ranging from marketing automation to CRM, commerce, and customer support. Maropost boasts among its customers brands such as New York Post, DigitalMarketer, Golden State Warriors, Warby Parker, and Mercedes-Benz.
The company’s first product is a cloud-based marketing automation platform, called Maropost. This product is targeted toward media, travel and tourism, and e-commerce segments, with the CEO noting Maropost has been aggressively expanding into the e-commerce vertical in recent years. This platform has approximately 300 customers.
The second product, called JetSend, allows users to send transactional emails. Maropost’s third product is now Neto. Neto’s platform helps businesses manage online stores, POS terminals, marketplace connections, inventory, order management, and shipping.
The acquisition marks Maropost’s first and is the latest development in its push into the e-commerce market. Maropost is acquiring Neto’s employees, as well as its customers.
In a recent interview with BetaKit, Paquette said the deal is aimed to bring Neto’s talent and experience in commerce to Maropost’s solution. Following the deal, Neto’s approximately 90-person team has joined Maropost’s team of 250 people.
“Obviously, the revenue and customers are great, but that wasn’t the driving force behind [the deal],” he said. “What we’re looking to accomplish is to acquire 30 or 40 individuals in the organization that have a tenure of over eight years, and, of course, that’s an extremely long time within the industry.”
Maropost hopes to leverage this knowledge of e-commerce to evolve its own e-commerce offering.
Maropost is among a unique set of tech startups, having achieved profitability without following the typical venture capital raising cycle. Paquette claimed Maropost generates 50 percent of its revenue simply through “word of mouth.” He believes Maropost is on its way to $100 million in revenue by next year.
Although the company has not participated in typical venture rounds, the startup has received some outside capital. In 2016, Paquette sold 25 percent of Maropost to Elephant and Highland Europe, in an all-secondary deal.
In August 2019, Paquette bought these firms back out and has not taken any venture financing since then.
“I tend to believe that there’s not enough insight or capability within the venture capital arena,” he told BetaKit. “What I mean is that most of them haven’t ever run a business and everybody’s setting up a firm based on what they feel is going to make their investors successful, which is inherently creating a conflict of interest in my opinion.”
The CEO said he believes there needs to be a change in founders’ approach to growth to one that is less focused on raising outside capital, and more focused on achieving profitability.
Interestingly, however, Maropost operates its own venture arm, Maropost Ventures, which invests in companies that contribute to social, wellness, and environmental causes. The venture arm’s portfolio includes several companies, such as Kitchener-Waterloo startup ApplyBoard and Elon Musk-founded SpaceX.
“The irony is we’re complaining about the same industry that effectively we’re subscribing to,” said Paquette. “But the reason we’re subscribing to it is that we believe that it can be done in different ways. It can be done from the perspective of investors that truly believe in the founders and are comfortable with the success or failure of the business at the end of the day.”
Maropost Ventures’ approach to investing is to select companies where the firm feels it can add value, be it through relationships and networking, or guidance on the technical side of the business.
Regarding Maropost as a business, Paquette noted plans to make future acquisitions of companies that are complementary to its product suite.
The CEO said his long-term strategy is to take Maropost public, calling an initial public offering a “natural progression” for the company. Paquette noted the company would likely look to go public within Toronto, citing the city’s “strong base” of tech companies.
Image source Maropost via Facebook.