BlackCart, a Toronto-based fashion and e-commerce startup, is coming out of beta with $2.8 million CAD ($2 million USD) in new seed funding. The funding brings the startups total raised to date to $3 million CAD.
“BlackCart is bringing much-needed innovation to one of the few retail categories where brick-and-mortar shops still offer a superior experience.”
The seed round was led by Struck Capital, with participation from 500 Startups, Revel Partners, and Dean Bakes, principal at M3 Ventures, in addition to several unnamed angel investors and an AngelList syndicate. With this new funding, BlackCart is fast-tracking the public launch of its platform, making it available earlier than planned due to the current climate of e-commerce. The platform launched publicly on May 25.
“Right now, due to the COVID-19 pandemic, the whole world is forced to shop online. While this transition may be seamless for categories like electronics or homeware, for fashion, it is much more challenging,” said BlackCart co-founder and CEO Donny Ouyang.
“People need to touch, see, feel, and try on clothes before they make a purchase,” Ouyang added. “Stores don’t charge you for clothes before you go into a dressing room, so why should online fashion shopping be any different?”
According to BlackCart, 53 percent of lost fashion sales are due to uncertainty around the look or fit of a garment, and that the lack of a dressing room is the number one reason why 65 percent of shoppers prefer brick-and-mortar to online shopping.
BlackCart had originally planned to remain in beta for a few more months, but because the pandemic increased e-commerce, the team decided to accelerate its plans, raise capital, and get to market sooner. The move to make the platform available to the general public was intended to make a more meaningful impact on the retail landscape.
Notably, BlackCart claimed the entire round was raised remotely, and mostly over Zoom calls. BlackCart’s raise may be the first Canadian tech company round closed entirely remotely during the pandemic.
Many VCs that BetaKit has spoken with, as well as CVCA CEO Kim Furlong, have noted that recently announced rounds were in the works prior to COVID-19, and investors and the companies had already met in person before closing.
A spokesman for the startup told BetaKit the team had not met any of the participating investors in person prior to closing the round. In an interview with Business Insider, Ouyang said the process took “five weeks of back and forth,” and involved “hundreds of emails” as well as about five or six meetings each day.
Founded in 2017, BlackCart’s solution offers a “try-before-you-buy” service for fashion e-commerce stores that integrates into a merchant’s online shopping cart. The tool is available as a plugin for WordPress and Shopify, and requires no upfront payment or hold on shoppers’ credit cards.
The company has also developed technology that addresses fraud detection, payments, returns, and user experience. Some of this technology allows BlackCart to assume all risk associated with damaged or unreturned items, instead of merchants taking on that risk.
Based on data BlackCart gathered while in beta, the company helped merchants see a 24 percent increase in conversions when the try-before-you-buy option was presented in customers’ shopping carts. The company also saw 90 percent of shoppers get approved for the try-before-you-buy features, without having a hold placed on their credit cards.
“BlackCart is bringing much-needed innovation to one of the few retail categories where brick-and-mortar shops still offer a superior experience to e-commerce,” said Adam Struck, founder and managing partner of Struck Capital. “We like backing founders with big visions, and Donny has a vision of transforming an entire market by providing the tools needed to simplify how customers and merchants interact.”
This story has been updated to reflect the correct currency of the raise.
Image source Unsplash. Photo by Lauren Fleischmann.