Booktopia has rebounded from an aborted $10 million crowdfunding campaign last year to land double that amount as it pushes towards becoming the company leading book retailer.
Champ Ventures CEO and co-founder Su-Ming Wong and JBS Investments CEO and founder John Sampson led a consortium of investors in a $20 million capital raise as the privately-owned Australian venture marks 16 years online.
Wong will join the Booktopia board as part of the deal. The raise includes a long-term portion of debt and the funds will be used towards expansion of e-commerce retailer’s Sydney warehouse. The company has posted 30% growth year-on-year for more than a decade. Its market share by revenue is on track to climb past the country’s leading book retailer Big W, in the next year.
Booktopia CEO and co-founder Tony Nash said the raise was separate to the company’s recent acquisition of the University Co-operative Bookshops, which slid into administration just before Christmas owing $15 million.
“We were already very well advanced with our private investors before The Co-op went into administration and as Tertiary Academic Sales were already a significant portion of our revenue it was deemed that if the numbers worked then we would purchase it from within our own financial capacity,” he said.
The backing from private capital is a victory for Nash after the crowdfunding disappointment.
While online sales are going gangbusters, with $131 million in revenue in FY19 and the company on track to post $175 million in revenue for the 2020 calendar year, the equity crowdfunding campaign last June only managed to reach 9% of its target and Nash and the board cancelled it. The $10 million was for an 8.1% stake in the business.
The company’s market share by revenue is on track to edge ahead of the number one book retailer in Australia, Big W.
Nash said his team were “thrilled to have this round” in place.
“The funding will allow us to accelerate our growth in a controlled and measured way by investing in our ability to deliver to Australian book consumers through expanded distribution infrastructure and stock,” he said.
“This has been a proven high growth and predictable model for us for 16 years and we are not about to change. We know that’s what our customers want from us.”
Nash said the investment group were experienced and understood e-commerce, retail and capital markets.
“It was very important we brought investors on board who can add value to the next phase of our journey,” he said.
The funds will be used in three key areas: increasing automation at the 13,000 sqm Sydney distribution centre to double capacity from 30,000 books per day to 60,000, increasing the number of titles in stock, as well as the quantities of each one; and working capital.
During the crowdfunding attempt, Booktopia said it had 148,000 titles in stock and wanted to increase that to 220,000 by 2020.
The business sells more than 10 books a minute and made a $1.9 million profit before tax in FY18. It launched in Sydney in 2004 on the same day Facebook started.