Rakuten, a leading e-commerce group in the world, has bought up the Estonian start-up Fits.me which provides virtual fitting room services.
Japanese giant buys up Estonian start-up
Fits.me founder Heikki Haldre said investment by was the logical path for the development of the company, allowing early investors to exit and a strategic investor to continue developing the company.
«Our cooperation with Rakuten began in November last year when Enterprise Estonia (EAS) arranged meetings with Estonian IT-companies for the Japanese. The cooperation developed fast culminating with Fits.me becoming a subsidiary to Rakuten,» he explained.
As assured by Fits.me CEO and a representative of Enterprise Estonia’s investment company SmartCap: while unable to disclose the numbers, the deal was good for the investors. «The investors reaped a nice profit – both the early business-angels and SmartCap,» said Fits.me shareholder and CEO James Gambrell.
«The fact that world’s third largest e-commerce group takes the trouble to deal with a thing means it is worth it. This was no small change deal,» said Andrus Oks responsible for Fits.me investment at SmartCap.
Mr Gambrell said the deal was excellent news for the entire team but especially for the 50 people employed in Estonia. «The plan is to hire extra staff in Estonia as we are now planning to develop even faster than before,» he said.
Since 2012, Fits.me headquarters with sales and marketing have been operating in London while Estonia hosts development centre, a lab operating in cooperation with University of Tartu, and photo studio. Mr Gambrell said this is how things will continue to be.
«Fits.me will be operating under its own brand, and will remain a separate firm. We will definitely expect the opportunity to offer our service in Rakuten’s companies, to continue servicing our current clients, and seek for new clients. Now, we have the financial means and the size to do that,» he said.
In addition to Europe, they are hoping to expand in North America – via a small competitor acquired in New York last year – and in Asia through Rakuten.
Though the last year featured rumours that Fits.me was not doing too well, Mr Gambrell said this was not a case of rescuing the company. «We did not need to be saved, but the large advantage with belonging to Rakuten group is that we now have the financial means and access to excellent enterprises in the sense of technologies and traders,» he explained.
Mr Oks said the news was definitely positive. «The team has earned a chance to conquer the world with Rakuten. The resource coming from Rakuten is something else. This is remarkable,» he added.
According to Mr Oks, Rakuten is the third largest e-commerce group in the world, which makes their ling to Estonia a milestone for the nation. «Essentially, we imported the group here. Even in the future, the perspective may be of much interest,» he said.
Rakuten’s yearly turnover is over $5bn and the group employs over 11,000 people. The company was established in 1997 by Hiroshi Mikitani who still continues as its CEO. The Rakuten headquarters are in Tokyo, but since 2005 the group has expanded into Europe and the Americas. In 2000, the company was listed at Tokyo stock exchange. Rakuten Group entails nearly 40 companies involved in web commerce, consumer credit, and news, travel and entertainment portals.
The latest Wikipedia data says Rakuten is tenth in turnover among internet firms and fifth in e-commerce after Amazon, JD.com, eBay and Alibaba.
For Rakuten founder Mr Mikitani, Estonia is no stranger – last year, he was granted personal Estonian ID-card and mobile ID test copies by President Toomas Hendrik Ilves.
Parent company Fits.me Holdings Limited is registered in the UK
Estonia hosts subsidiary Massi Miliano OÜ with 2014 turnover of €2.5m and profits at €375,000
60 employees, most of them in Estonia
Established in 2006 by Heikki Haldre and Paul Pällin
Investments accumulated at €12.9m including €1.4m by Estonian public hedge fund SmartCap
Technology created in cooperation with technology institute, University of Tartu