Alloy Automation, a Y Combinator graduate focused on connecting different e-commerce tools, announced this morning that it has closed a $20 million Series A led by a16z. The startup characterized the funding event as brisk, a contrast to its 2021 capital event when it was harder for the company to secure funding.
TechCrunch covered Alloy’s seed round just over a year ago, when the startup raised a $4 million round at a $16 million pre-, and $20 million post-money valuation. More simply, Alloy just raised as much capital as it was worth a year ago.
TechCrunch spoke with co-founders Sara Du, Alloy’s CEO, and Gregg Mojica, the company’s CTO, about the round and how their company’s pitch has been refined in the last year.
Alloy Automation’s Series A
Alloy noticed it had been somewhat more conservative in cash-burn terms than other companies of its size when it went out to fundraise, the co-founders said. As the venture market begins to rediscover price — and therefore spend — discipline, that fact didn’t harm the startup’s fundraising prospects. And Alloy had a good fourth quarter, which also didn’t hurt, Du and Mojica told TechCrunch.
Why did the company raise more capital? A few reasons, per its founders. Cash, of course, is always good to have more of at a growing business. But nearly as important for Alloy was the signal that having more capital and having a16z in its cap table afforded it. Both, the co-founders explained, helped establish the company, allowing it to secure partnerships. And with the cost of talent where it is today, having more total funding means that Alloy could snag the people it needs without fretting about near-term cash management.
Alloy applies its automation technology — a method of linking apps together to allow companies to create automated workflows — to the e-commerce market, its focus on the sector stemming from early customer demand. Today, the startup pitches itself as a control panel — or operating system for e-commerce coordination — across applications.
The automation market is not small. Recall that Appian, another company in the workflow and automation space, recently bucked the trend among public software companies in reporting growth that investors actually liked; generally accelerating growth over a period of time will do that. For Alloy, Appian’s recent success implies growing TAM, something that founders and investors alike covet.
In an interview, Du and Mojica said that in the past, e-commerce brands were likely to build their own tech stacks. Today, in contrast, third-party software is the norm. That shift likely creates room for what Alloy is building; the more software services that an e-commerce brand uses, the more likely that it will want them to integrate and complement one another.
Alloy is just over 20 people today but has aggressive hiring plans, as you would expect. The company loosely expects to double its staff this year, it said.
Alloy is a somewhat neutral player in the world of e-commerce software, wanting to sit in the middle of the web instead of creating all the strands itself. Given that, it wasn’t a shock that when TechCrunch caught up with its founding team, Mojica was in Texas at a BigCommerce event. BigCommerce, a recently public headless e-commerce software company, shares an ethos with Alloy in that it also wants to be largely customer-choice agnostic. This model of openness contrasts modestly with some other players building revenues off of first-party solutions to things like payments. Shopify is the obvious example of that in the e-commerce world.
It will be interesting to see how Alloy manages its neutrality as it works to grow its centrality, from a partner and customer perspective, respectively. Certainly the startup now has the cash to see its next four to six quarters through. Let’s see how far it can get before it returns to the venture capital mines.
Source : Alloy Automation raises $20M to scale its e-commerce automation tech
