Japan’s first startup unicorn is considering a new fundraising round to maintain momentum after a spike in U.S. downloads for e-commerce company Mercari Inc.
The company’s free mobile app, which matches individual buyers and sellers, jumped to No. 3 in the U.S. download rankings last week, according to researcher App Annie. Daily downloads climbed tenfold to 300,000, bringing total installations in the country to 12 million, according to Mercari.
“We’ve passed a tipping point and the fire is beginning to spread,” Chief Executive Officer Shintaro Yamada said in an interview in Tokyo this week. “How do we maintain momentum while keeping an eye on rivals and new markets? These are the things you consider when shifting gears. Additional fundraising may be necessary.”
Mercari in March raised ¥8.4 billion ($83 million) to help fund expansion in the U.S. — home turf for industry pioneers Amazon.com Inc. and eBay Inc. The Tokyo-based company is also considering introducing a service in the U.K. as early as this year, Yamada said. He said loans or an initial public offering are options, although an IPO is less likely.
The app is generating more than ¥10 billion in monthly transactions in Japan, where it has 30 million downloads. Mercari typically takes a 10 percent cut of each sale, a charge it has dropped in the U.S. to spur adoption.
While the service has no direct competitors in the U.S., it has still taken time to win users’ trust and tap into the right communities, Yamada said. Its marketing strategy there has differed from that in Japan, where TV commercials were key to adoption. Instead, Mercari has advertised on social media, including Facebook, Twitter and Instagram.
The company traced the recent spike in downloads to cosmetics and fashion fans in New York. It is now considering how to best engage its most influential users. Tracking the buzz proved to be challenge, in part because some of it came from users sharing screenshots on Snapchat, whose messages disappear after they are viewed.
“We have various theories as to how this happened, but can’t say for sure,” Yamada said. “It’s a bit like a forest fire, only need one spark in the right place to get it going.”