Nosto raises $16M as it launches site search within its Commerce Experience Platform (CXP)
The capital from Mandatum Asset Management Growth Equity (MAM GE) will be used to scale Nosto’s new personalized site search solution globally, accelerating its mission to make every online impression relevant
New York, February 23, 2023—Nosto, the world’s leading Commerce Experience Platform (CXP), has today announced the closure of its latest funding round of $16M USD, from Mandatum Asset Management’s Growth Equity team (MAM GE).
Already backed by OpenOcean, Wellington Partners, Eurazeo, and Tesi among others, the latest round from MAM GE accelerates Nosto’s mission to make every impression relevant.
Since its founding in 2011, Nosto’s technology has helped over 2,500 global commerce brands such as Paul Smith, Kylie Cosmetics, Muji, Dermalogica, Centric Brands, and Princess Polly create the ultimate online experience for shoppers.
And demand for such technology is only going to increase. According to data presented by Shopify, global ecommerce sales are expected to total $6.3 trillion in 2023. In North America alone, ecommerce sales in 2022 were estimated to have hit $905 billion growing to $1.1 trillion in 2023.
North American merchants using Nosto saw gross merchandise volume (GMV) grow by 300% from $1.7 billion in 2018 to $6.8 billion in 2022, giving a 44% compound annual growth rate (CAGR). Of those merchants, the ones using Shopify’s platform saw even faster GMV growth of 420% from $1.1 billion in 2018 to $6 billion in 2022, giving a CAGR of 51% over the four-year period.
“Merchants using Nosto are growing quickly, and merchants using Nosto on the Shopify platform are growing quicker still. This investment will help us continue scaling our Commerce Experience Platform, supporting brands in their own growth ambitions. This fundraise represents a shared vision for the opportunities that lie ahead in the ecommerce space for both Nosto and our merchants,” says Jim Lofgren, CEO, Nosto.
“Since launching site search natively within our CXP, we’re uniquely positioned to disrupt the product discovery space. Not only are we leveraging recent developments in semantic search and natural language processing, but we’re also unlocking valuable search data that is often siloed within point solutions. Giving brands the power to take search data and use it to inform their personalization and merchandising strategies across the rest of the online experience, and vice versa, all within a single platform, means that data can be harnessed from anywhere and actioned everywhere. This creates a completely personalized experience for shoppers and a high-performing online store for brands.”
MAM GE targets Nordic high-growth companies with proven business models and established and ambitious teams. As an active minority owner, MAM GE closely partners with management to enable growth and internationalization. Upon closing this latest transaction, Nosto has named MAM GE’s Rami Salonen its newest board member.
“We are excited to partner with Nosto and accelerate their international operations,” says Salonen.
“The Nosto team has already shown that a customer-focused business model, enabled by strategic partnerships, truly creates sustainable value not only from the business perspective, but also for the end-users. We hope to support the team in its growth journey and enable the company to keep leading the way with best-in-class products that are praised by its customers.”
Site search is one major element of Nosto’s mission to make every impression relevant. According to Nosto’s product discovery research conducted in January of this year, 69% of all shoppers go directly to the search bar on a brand’s website, indicating that product discovery starts and ends with search. If a website’s search is poor, the entire experience a customer has with that brand is poor: Nosto’s research found 80% of all shoppers are leaving ecommerce websites due to underperforming site search and irrelevant results.
Their research also found that 95% of all brands cite major pain points with their current search technology, but 85% say they plan to continually invest in that area underscoring the importance of this part of the ecommerce technology stack.
“One of the key areas of current investments is our ecommerce search solution that utilizes Nosto’s predictive intelligence and advanced merchandising tooling, allowing merchants to make every impression more relevant across the entire on-site experience. There’s an urgent market need for intelligent and personalized search technology for ecommerce that allows merchants to meet their business goals,” says Juha Valvanne, Founder and Chief Corporate Development Officer, Nosto.
“This raise allows us to accelerate our innovation and continue developing our Commerce Experience Platform. It also empowers us to continue making more acquisitions. Nosto is a profitable company, and we have made three acquisitions in 18 months. We continue to look for attractive acquisition targets to expand both market share and product offering.”