After a seed round of funding, Topsort, an auction-based advertising firm, is now valued at $110M

Shopify merchant Regina Ye remembers being so fed up with advertising solutions that she spent finals week going up late to find out how advertisements worked on Facebook and Amazon during her time at college.

“It was really difficult.” When I first started using B2B marketplaces, advertising was a mystery to me.” Because of this, I had no idea how much work it would be for me, as a vendor.

Her frustrations stemmed from the difficulty of monetizing the channels efficiently and the absence of direct promotional tools provided by the retail channels she was selling via, which she hoped would be both less crowded and competitive than Facebook or Google, respectively.

Michael Ostrovsky, a specialist in marketplace design and auction theory and a serial entrepreneur who founded Groupon, were among the people Ye encountered while working as product lead at Hopin Ye.

The group looked at ways to develop in this field without having to deal with privacy issues as the transition to user privacy affects more markets. A collaboration between Ostrovsky and Topsort was launched in 2021 to offer auction-based advertising technology, through APIs, so that smaller merchants and suppliers may more readily market without the dependency on cookies, which are expected to disappear.

As a means of efficient promotion, they use retail media technologies for small enterprises, which they call “auctions.” Using the API, users may initiate campaigns, including sponsored listings, banner advertisements, and video commercials, and can manage how the ads are presented as well as how ad quality and relevancy are assessed. According to Larrain, the auctions may be completed in as low as 20 milliseconds with a request rate of 10,000 per second.

Topsort uses its unique algorithm to recommend how much to bid for a click in order to optimise the number of clicks and conversions. As a result, suppliers may set a budget and time frame for their cost-per-click advertisements and the firm will handle the rest. If the market is favourable, Ye claims it can guarantee a return of between two and four times.

According to Ye, “I don’t think advertisements should be a guessing game.” “This is a pretty clean method of conducting advertising, and we fill the gap with no privacy data except arithmetic and machine learning.” We’re unique because we’re so simple to use, which is why advertising technology has had a terrible reputation.”

Most of Topsort’s clients have joined in the last four months, and some of them are already generating gross merchandise values ranging from $1 million to $15 billion.

For Cyber Monday, Babytuto, a Chilean parent and baby goods shop, partnered with the brand. It is estimated that promoted listings on Babytuto will ultimately earn extra profit equivalent to roughly 5% of their gross merchandise value based on the vendor activity, performance of this batch of sponsored listings, and the marketplace features.

There are a number of early clients, including Yummy, Facility, Airlift and Chiper that Ye claims the firm has learnt a great deal from thus far, including Babytuto.

With the $8 million obtained in early capital, the firm is now worth $110 million. Preferred investors include Pear Ventures, Quiet Capital and FJLabs in addition to individual investors like Micky Malka (Ribbit Capital), Lydia Jett (SoftBank), Akhil Paul (Comma VC) and others.

To expand Topsort’s presence in Latin America and Asia, Ye and Larrain said they want to use the fresh money.

“We are hitting a point where we have gone from zero to one, and all of the investors doubled down,” Ye said. “We’ve hit our customers in their ramp-up, but we would love to be there earlier. This area is so misunderstood, and we want to do more user education and come up with different ranges of products to also help smaller marketplaces get started as we work with all marketplaces at a different scale.”