Toronto-based Bonsai has secured $21 million CAD in Series A financing to build on the recent growth of its “point of discovery” online checkout technology.
Launched in 2016 as a men’s streetwear shopping and news app, Bonsai shifted into a commerce tech company for media publishers in 2020. Bonsai founder and CEO Saad Siddiqui called the startup’s latest financing “evidence that the pivot worked.”
“We’re talking about a whole new frontier of payment volume.”
-Saad Siddiqui, Bonsai
“Our hypothesis has always been around content and commerce,” Siddiqui told BetaKit in an interview. “How do we get people to buy from content speaking of their products? That hasn’t changed.” What did change, however, was that the Bonsai team realized that rather than serve as a curator themselves, they were “better off” providing their commerce infrastructure to other companies.
Now, with a list of high-profile media publisher customers that includes BuzzFeed and Vox, Bonsai is ready to bolster its product, expand its retail partner catalogue, and start facilitating sales on new platforms. To get there, Bonsai plans to double the size of its 90-person team over the next 18 months.
Bonsai’s Series A financing was led by Toronto’s Framework Venture Partners, with support from Vancouver’s Lyra Growth Partners, PlentyOfFish founder Markus Frind, and some undisclosed United States (US) investors. The all-primary round consisted of $14.5 million in equity and $6.5 million in debt. Siddiqui declined to disclose the debt provider, which the startup claims plans to announce its commitment at a later date. The raise brings Bonsai’s total funding to $38 million.
Bonsai aims to “power checkout at the point of discovery on the internet.” The startup provides checkout infrastructure to publishers and merchants. The company’s tech enables publishers to convert affiliate links into an on-site cart and checkout flow. In addition to allowing said publishers to capture first-party user data, Bonsai claims this allows its publisher customers to retain higher incumbent affiliate networks. For merchants, Bonsai offers an alternative customer acquisition channel to Facebook and Google.
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“Our view is that consumers discover what to buy on all these different surfaces and all these platforms,” said Siddiqui. “So that’s publisher sites or social platforms or from influencers and creators … Our belief is that those same surfaces should be points of sale.”
Today, Bonsai works primarily with publishers. “They use our infrastructure to be able to sell products through embedded checkout, so instead of clicking on an affiliate link inside of a BuzzFeed article, you can now click on the product there and it’ll pop up a checkout flow right then and there,” said Siddiqui.
Initially, Bonsai sought to deliver improved shopping experiences through its own app. “Our first assumption about how to solve that problem was that we built our own consumer app and then we’d be a destination where people came to us,” said Siddiqui.
But after one of its partners, Complex, asked the company to build out a commerce product for them, Bonsai soon learned that its tech had a better application.
“We realized that we can only be so effective as an authority and a point of view and a curator—we’re better off giving our infrastructure to people who know and have a stronger point of view than us and have an existing audience.”
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Since launching its embedded commerce solution in January 2021, Bonsai has amassed a list of customers that includes media conglomerates like BuzzFeed, Vox Media Group, and digital publishers like PureWow, Refinery29, and Well+Good.
According to Siddiqui, Bonsai’s publisher business is “growing really quickly.” The company expects to have 75 publishers using its tool by the end of 2022.
“Bonsai has the strongest merchant integrations and the most number of publisher implementations we’ve seen in the market,” said Framework Founding Partner Andrew Lugsdin, who is joining Bonsai’s board as part of the round. “This, combined with a deep understanding of publisher affiliate businesses, makes Bonsai a unique and compelling player in the checkout provider landscape.”
The Toronto startup operates within the increasingly competitive online checkout space, which features fellow upstarts like Winnipeg’s Bold Commerce, as well as larger players like San Francisco’s Bolt, and London, United Kingdom-based Checkout.com, which recently nabbed a $40 billion USD valuation.
According to Lugsdin, Bonsai’s focus on providing checkout “plumbing” differentiates the startup from other operators in the space, which offer “a narrow, out-of-the-box checkout.”
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“I think checkout is going to become a fiercely competitive space in the next 12 to 24 months, no question about that,” said Siddiqui, who hailed the increasing competition in the sector as a positive. “Being this competitive is good for us. It is increasing the size of the pie and it also creates a lot of optionality for merchants.”
At the same time, Siddiqui said that most of the other players in this sector focus on facilitating or servicing payment volumes on the merchant side.
“Bonsai is not doing that,” said the CEO. “To facilitate BuzzFeed’s affiliate [gross merchandise volume] through a checkout on BuzzFeed is net-new GMV being created. I think that’s where Bonsai is really differentiated, is that we’re talking about a whole new frontier of payment volume, which I think is what makes us so valuable.”
To date, Bonsai has built up a strong retail partner supply base in fashion and beauty. Now, the startup plans to diversify its catalogue and develop more of a presence in high value consumer categories like tech and electronics.
According to Siddiqui, publishers remain a focus for the startup. But the CEO says the company’s publisher business has reached “a critical mass.”
While continuing to cater to publisher content, going forward, Bonsai plans to invest the new capital in “exploring different surfaces” where its products can be sold, “whether that’s a creator platform or a social network,” said Siddiqui, who added that the company is “well-equipped” to do so with its Series A capital.
Feature image courtesy Bonsai.