Sramana Mitra: You wanted to set the company for exit.
Ruslan Fazlyev: Yes.
Sramana Mitra: Where did you go to look for financing?
Ruslan Fazlyev: I never really looked proactively for financing. The way it worked is, Ecwid was named as the hottest technology company in Russia after winning this competition by Google and Forbes in 2010. I had a lot of inbound interest. I just reacted on that inbound interest.
Sramana Mitra: What did you have in Ecwid at that time that awarded that coverage?
Ruslan Fazlyev: It’s the technology of embedding a store in a website.
Sramana Mitra: The product was already in the market?
Ruslan Fazlyev: Yes.
Sramana Mitra: How many customers did you have for that product?
Ruslan Fazlyev: I think we had 10,000 registered merchants.
Sramana Mitra: Were these paying customers?
Ruslan Fazlyev: No, these were merchants. I think it was days or months after we launched our paid subscription. We had very few paid customers by then.
Sramana Mitra: How did 10,000 people find out about Ecwid?
Ruslan Fazlyev: It was a combination of a few things. We seeded that product with some traffic from X-Cart. It was highly relevant traffic. X-Cart customers were aware that this was a new thing. Second is that it was present in extension marketplaces for content management systems such as WordPress, Drupal, and Joola. E-commerce with Ecwid was the easiest way to set up shop. You could find it in WordPress marketplace. Some people just shared it. It spread virally.
Sramana Mitra: Interesting. By the time you won this award, there were 10,000 registered users. This coverage hit the press and you got a bunch of investor interests. Who were these investors? Were they Russian investors or international investors?
Ruslan Fazlyev: It was a mix. Some were Russian and some were international. On my shortlist was the Runa Capital, which is a global fund with a Russian origin. There’s this shrewd investor from Silicon Valley. He’s super committed. The moment he learned about us, he visited Russia. Now I’m based in San Diego, California. Back then, I was based in Russia. The guys got Russian visa.
I really liked working with these two funds. What got Runa Capital a deal was that Runa was able to accommodate a more complex structure where they invested in Ecwid and also acquired a share in X-Cart. With the Silicon Valley VC, the approach was, “We can invest in Ecwid but you have to get rid of X-Cart somehow.” But we can’t get rid of a company that makes millions of dollars in revenue. We went with Runa Capital and never looked back. They turned out to be a great venture capital fund.
They have a very strong network in all sorts of web hosting industries. They probably know the Founder or CEO’s of the top hosting companies in the world very well. As Ecwid is a snap-on e-commerce, it’s perfect for selling through channels meant for website hosting companies and site builder companies. Runa helped us build this sales channel to e-commerce-enable site-building companies.
Sramana Mitra: How much did you raise from Runa?
Ruslan Fazlyev: It was a really small round. It was a million and a half.