Why Conviction backs Tillo in times of crisis
By: Kristina Lazurenko
Tags: Marketplaces, SaaS, VC, Gift Cards, B2B

‘There are some decades when nothing happens, and there are weeks when decades happen’. Today, Vladimir Lenin’s statement rings true with most, and perhaps for the first time with many. Some of us have grown a few grey hairs watching the dramatic events of the past few weeks unfold at such seismic speeds and magnitudes.

Positive news is hard to come by amidst the chaos that is Covid. Media outlets are held hostage by the devastating train of Covid-induced wreckage and ensuing uncertainty. Lives are being lost, families broken, societies and economies changed as we knew them. In our line of work, many early stage businesses will never recover and cease to exist.

However, as with anything, there is a light at the end of the tunnel. We, at Conviction, have some warming news on our latest investment in a company that was quick to adapt and use its software to help people in need in these difficult times.

This business is Tillo, a B2B software platform that powers the digital gift card market. It operates in the gift card sector most commonly thought of in the context of physical cards gifted to relatives and friends at Christmas. Naturally, we were pleasantly surprised to learn that B2B rewards constitute a whopping 50% of $300bn global gift card market and are the fastest growing at 15.6% a year. And, what’s more, only 30% of the market has undergone digitisation, leaving a mammoth opportunity for growth and innovation.

Tillo’s platform helps brands, that we all know and love (Adidas, Amazon, Primark to name a few), sell digital rewards to a vast range of businesses in one place using a single API. The software presents a vital step change from the incumbent agency-led, fragmented and predominantly manual processes. Until now, the majority of transactions involved an array of spreadsheets, integrations and outdated tech stacks.

Tillo provides buyers (businesses/partners) and sellers (brands) with a full stack of tools to distribute, track and analyse digital rewards’ transactions in real time and with little effort. It also acts as a CRM system where brands and businesses are able to forge and build relationships selecting a desired degree of involvement on a brand by brand, partner by partner basis.

Apart from being a tech pioneer and true disruptor in its respective industry, what attracted us to Tillo was its laser focus on capital efficiency and profitability. The company represents a rare breed of early stage businesses able to deliver growth whilst maintaining a positive operating margin. Trading in the ‘green’ places them in an enviable position relative to peers and competitors, particularly in the new world where ‘dry powder’ is fast becoming scarce and harder to access.

Now, a few weeks since our investment and we are blown away by Tillo’s response to Coronavirus. Over the next months its tech platform will power the UK government’s initiative providing free meal vouchers to nearly 45,000 schools and over 1m children. The £15 vouchers are distributed digitally and can be spend on food at a range of shops including Tesco, Asda, Morrisons, Waitrose and M&S. Tillo are seeing a growing uptake from the community of schools and hoping to support as many families as they can during these arduous and taxing times.

Moreover, along with the government efforts, Tillo’s clients continue to buy digital gift cards to retain, reward and support their employees and end-customers. Meanwhile, brands (those that are able to trade) are desperate to generate incremental revenues by tapping into all available customer acquisition channels Tillo. As a result, we are seeing Tillo’s volumes and revenues grow whilst delivering significant value and ROI to the ecosystem it aims to support and connect. The average value of gift cards sold through Tillo is 150% higher than the UK wide average.

To summarise, in Tillo we found a hidden gem of a business in a somewhat forgotten, and yet, enormous industry sitting at the cross section of ecommerce, employee recognition and alternative payments. The latter offers a vast commercial opportunity for Tillo as it develops partnerships with well known challengers banks and crypto wallets.

We are extremely proud and excited to join Tillo’s existing investors, Passion Capital and Paul Forster (Founder & CEO of Indeed), on their journey in building one of the leading, tech first rewards platform in the world.