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Funding news are coming in from Fast Lane Ventures, as its portfolio company, an online sport goods retailer Heverest.ru raised $4.3 million in financing from German eVenture Capital Partners and one of Russia’s largest investment funds. This brings the total investment in the company to $6.7 million. Heverest is after the Russian sports and leisure market, which according Russian market research agency RuMetrika.ru reached $6 billion in 2010.
At this stage the company received around 600 000 visitors each month, and offers over 6000 items of sport and leisure merchandise.
I was wondering how these figures compare to, say, a dotcom equivalent of Heverest, but could not find a suitable example of the sports goods e-tailer. But here is an story of Pets.com, which raised $180 million in funding back in 1999, but still went bust, as the money was not sufficient to scale the company to the breakeven point.
It is fascinating to see how much the world and the Internet has changed over the past 10 years. In 1999 there were only 279 million people online worldwide. Today, almost three times as much are using Facebook on a monthly basis, and the world Internet community has expanded to 2 billion. Russia, the main target market of Heverest.ru, has more than 50 million people online.
Yet, unlike Pets.com, which had to employ 40 IT engineers and maintain a server farm, Internet companies these days are enjoying cloud hosting services, off-the-shelf and increasingly cloud-based ecommerce solutions, as well as outsourcing options for customer care.
Pets.com could not raise further $80 million to get to a break-even point, shared former Pets.com CEO Julie Wainwright as she bashed a sloppy reporting of Business Insider reporter William Wei, while offering her story of why Pets.com went bust. The markets crashed, and Pets.com chose to return money to its shareholders rather than to spend it all and file for bankruptcy.
Now, we are cheering companies which close tiny seed rounds, let alone a sizable cash injection Heverest.ru just received. Rather than building a server farm to process online transactions, the company plans to spend the money to expand its product offering and develop its current CRM system to improve their customer service.
As to the customer service, perhaps they can integrate a cloud tool NiceReply, made in Slovakia, which allows consumer rate the customer service they receive.
The Internet has become a significantly less expensive platform to build businesses. Increasingly it is more about marketing and consumer experience and less about technology, it seems.
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