While e-commerce giant Shopify was blowing past analysts’ forecasts yet again with a record-breaking earnings report on Wednesday morning, another tech company from the National Capital Region was scoring a win for the brick-and-mortar crowd.
Gatineau-based Foko Retail – a seemingly rare entity these days in that it makes software targeted at traditional retail businesses located in physical stores – announced it has landed $3 million in fresh funding to help it scale up and branch into new verticals.
BDC Capital led the new investment round, with additional funding from Canada Economic Development for Quebec Regions, a federal agency aimed at boosting SMEs in Quebec, as well as local economic development organization ID Gatineau and current shareholders.
Foko’s signature app allows managers, front-office staff and retail workers on the floor to communicate via instant messages as well as share photos, videos and documents with one another. CEO Marc Gingras says the firm plans to use the additional capital to expand into new customer segments and grow its presence in its core markets of the U.S. and Europe.
“There’s still a lot of growth (potential) in those two areas,” he says. “We just want to keep our focus there.”
The new investment is yet another show of market confidence in Foko, which was founded nearly eight years ago.
Foko started out as a photo-sharing app for businesses, gaining initial traction with companies that used it primarily to share goings-on with employees around the world.
Over time, it has undergone a gradual metamorphosis into an all-around communications platform. Head-office execs use it to keep track of what’s happening at individual stores and share information on company policies and procedures, while managers rely on it to instantly send photos and videos of what they expect a store to look like and how specific tasks – say, setting up product displays – should be done.
It’s a product that’s clearly found a niche. More than 60 companies, including Converse, Nike and Whole Foods, now subscribe to the service, and the firm’s revenues have been growing at an annual rate of 60 per cent for the past few years.
But as in any business success story, luck has also played a part in Foko’s rise.
About two years ago, the company decided to look beyond its sweet spots in the apparel and specialty retail spaces and start chasing customers in the grocery and pharmacy verticals – businesses that, soon enough, were deemed “essential retailers” when the pandemic raged in 2020.
With consumers flocking to supermarkets and drugstores for everything from toilet paper to hand sanitizer, Foko saw big gains in those customer segments as the year went on.
"The market is picking back up, so we’re happy to now have money in our coffers to be able to propel that."
Meanwhile, its traditional brick-and-mortar clients quickly realized they needed the app more than ever to keep employees abreast of rapidly changing COVID-related protocols and explain new sales approaches such as curbside pickup.
In fact, Gingras says the company's churn rate last year – the number of customers that left the platform – was the lowest it's ever been.
“Initially, when the pandemic hit we were a bit worried,” he concedes. “But quickly we started to realize that our solution became critical to running the operations in a store.
“Now the market is picking back up, so we’re happy to now have money in our coffers to be able to propel that.”
Gingras says Foko plans to “double down” on its sales efforts in the food retail and pharmacy sectors while continuing to invest heavily in R&D to bolster its suite of services and make its app even more user-friendly.
Of course, that means even more hiring. Now at about 50 employees, Foko has grown its headcount by more than 40 per cent since last summer and has no plans to slow down.
Gingras says the company is poised to really hit its stride as the world emerges from the pandemic, and landing the right talent to help it pursue the opportunities in front of it will be a key to its future success.
“Finding the people with the skillset is always doable,” he says. “Finding the people with the skillset that have the right culture fit – that’s the challenge. But we’re lucky in that our culture is very strong and it’s attracting people.”