Fitted looks beyond Series A to IPO
by Sharon Fisher
Fitted, one of the Treasure Valley’s startups with the best history of raising money – it raised $1.2 million in seed funding in 2020, followed by $3.4 million in 2021 -- has officially joined the 50 to the A club, raising $8.5 million in Series A funding, closing at the end of June.
So why go Series A now?
“We were kind of at this inflection point,” said Monte Keleher, CEO and cofounder of the Eagle-based company. “The product was pretty built out, we were onboarding some larger brands, and getting ready to scale. We needed the financing so we could go another 15-18 months without having to raise capital.”
The four pillars of retail
Founded in 2020, Fitted develops software for retailers, focusing for the moment on sports and athletic wear – a $95 billion annual market in the United States, Keleher noted. But before understanding what Fitted does, it’s important to understand how online retail sales works, he said.
The best way to think of it is as a universal connectivity platform for the four pillars of retail sales: Ordering, inventory, payments, and data, Keleher explained. It connects brands and retailers ranging from the enterprise level to small mom-and-pops. “We are a single solution with all four pillars,” he said. While each pillar has several software firms vying for that market – some of them multibillion-dollar companies – no single vendor is providing all four pillars, he said.
Keleher developed the software to help deal with problems he experienced himself as a sporting goods retailer. “My background is, I owned running specialty retail stores in the Bay area,” he said. “If I want to connect and order and pay Nike or Adidas, I have to connect to all these individual platforms and do different things,” such as ordering inventory on one and paying on another. “Why isn’t there a single platform in which all brands and retailers exist and do business -- data sharing to inventory sharing to ordering and payments, through a single program that handles the lifecycle of an order between brands and their retailers?”
While the software handles all sizes of retailers and manufacturers, different-sized companies find different value in the product’s capabilities, Keleher said. “The big enterprise brands are after our data,” he said. “Because we’re connected to thousands of retailers, we share it back to the individual brands. The smaller brands are more interested in the financing piece. They’re trying to grow quickly and need cash upfront. They want to get paid so they can take that money and reinvest it in more inventory. Midlevel companies are interested in ordering and payments.”
Financing
The $8.5 million Series A round was led by Capital Eleven, with followon from Salt Lake City-based Epic Ventures and Handshake Ventures out of the Bay Area, as well as Braintree Group and Trolley House, Keleher said. Several of the investors had participated in previous funding rounds, he added.
As with many other startups, raising financing in this economic climate was challenging, Keleher said. “Things definitely have changed in the last 8-12 months,” he said. “We talked to tons and tons of VCs -- probably four or five every week,”
What finally made the difference was the company’s consistency, where its original investors believed in where it was going, and finding the right partners, Keleher said. Then when Meridian-based Capital Eleven came in, several other companies followed it, he said.
Fitted wasn’t specifically going after local investors, but it just worked out that way. “Local’s nice. We definitely prefer local,” Keleher said. And he particularly praised Capital Eleven. “The team over there, they’re true partners -- entrepreneurs themselves. They really understood us.”
Spending it
Before going Series A, Fitted had had a layoff of as much as 25 to 30 percent of its staff. “We did that before, to get the maximum amount of runway,” Keleher explained. Since then, he’s been looking to rebuild the team, focusing on sales and marketing. “Now we’re back up to about 26 people full time,” he said.
Fitted is expanding geographically as well, starting with Salt Lake City. One of its new vice presidents is located there, and the region has a large sales culture, Keleher said. But the company will continue to be based in the Treasure Valley, he said.
Beyond that, the company hopes to grow its top line revenue and gain more larger enterprise brands, followed by another financing round in 15 months or so, Keleher said.
And at some point, Fitted may look past athletic wear. “We plan on going beyond that,” Keleher said, into areas such as hardware, groceries, and pharmaceuticals.
As far as an exit strategy, the company’s opportunity and vision is to have an initial public offering, Keleher said. “That’s what we’re focused on,” he said. “Obviously, if there’s an incredible partnership that makes a ton of sense, we’ll entertain that, but we’re focused on winning where we know we can win.” And when? “We don’t plan on taking ten years,” he said. “Typically, companies like us would do that in the four- to five-year range. Five to seven years is the average. We’ll see.”
Sharon Fisher is a digital nomad who writes about entrepreneurship.