After raising another $50 million from existing investors, a Columbus e-commerce startup is aiming for $50 million in revenue this year and has a path to profitability without the need for more capital.
Loop Returns almost doubled to about $30 million in sales in 2022 over the prior year, despite slowing in the second half of the year amid inflation and rising interest rates, founder and CEO Jonathan Poma told Columbus Inno.
"We have great investors who believe in the business," Poma said. "We have a great opportunity in front of us, and a solid momentum with some of the best merchants in the Shopify ecosystem.
"I want to build a durable, profitable business that sustains and does a great job employing people and creating entrepreneurs (who) contribute to the startup ecosystem, and building great leaders."
The additional infusion at year's end brought Loop's Series B that began in mid-2021 to a total of $115 million, according to a regulatory filing for the company, incorporated as Xariable Inc. Overall there were 37 investors in the full round.
The round officially closed early this year instead of reaching for the $125 million goal listed on the Form D, Poma said. Columbus Inno reported on the filing in January, but Poma was not yet able to comment then.
New York City-based FirstMark Capital and Silicon Valley's CRV, both Series B investors, led the extension, he said.
"It was a feel-good round, upon reflection," Poma said. "The intention was to control our own destiny – not needing to raise again."
Managing the capital to speed growth while keeping a solid reserve, he said, will help meet his goal of profitability and $100 million in annual recurring revenue in 2025.
More than 1,800 merchants on Shopify use Loop's integrated software – up from some 700 in 2021. Loop creates a 24/7 portal for customers to initiate a return but first encourages an exchange. The software also reduces costs of printing labels and helps detect and prevent returns to abusers.
The company estimates that retailers using Loop have preserved $900 million in sales over five years.
Loop also created an analytics app that compares refund rates and most frequently returned products with industry benchmarks.
Last year merchants started charging fees through Loop for returns, and sometimes for exchanges, to mitigate shipping and restocking costs.
"We really saw no statistically significant change in consumer behavior based on those fees," Poma said. "People are willing to spend if it's not a surprise. (They're) paying for remarkable convenience."
In 2021 there were two competitors of about the same size that were later acquired. Loop outgrew them by staying independent, Poma said.
"We are today by every reasonable metric the market leader in the returns management space," he said. "We were able to stay focused and not have different expectations, vision change, core values change."
Consumers are spending, and returning, less online as of the first quarter this year due to economic uncertainty.
"Our merchants are up year-over-year," he said. "That’s not necessarily true of the entirety of the Shopify ecosystem."
A remote-first company with its headquarters in the Short North, Loop has doubled since 2021 to about 200 employees. One-third are in Central Ohio, Poma said.
The company also reshaped that workforce based on performance and culture instead of economics, Poma said, contrasting the moves with the wave of workforce reductions throughout the tech industry over the past year.
Loop parted ways with about 15 people, including the CFO and chief revenue officer. The company is seeking a finance chief but not immediately planning to fill the sales role.
"We got far more aggressive in our performance management and the versatility of our people," he said.
Some of the reductions were made to ensure retaining the most productive employees.
"If you have someone on your team who's not performing, and you don't do anything, everyone who is performing looks around and says, why is that tolerated?" Poma said. "In periods of largesse and massive growth, companies can take their eye off the ball."
