One of Vermont's fastest-growing tech companies has a new majority owner. Silicon Valley equity firm HGGC has acquired Winooski-based MyWebGrocer — the New York Times reported the news today on its DealBook blog; the company also distributed a press release.
In an interview in his Champlain Mill office overlooking the Winooski River, CEO and co-founder Rich Tarrant Jr., confirmed that HGGC has invested "a great deal of money" in his online grocery biz. "They are firm believers that we are on the right track,” he said. Tarrant declined to disclose the terms, but DealBook wrote that sources close to the deal confirmed it was within the $25 to $100 million range.
Tarrant explained that he and his brothers, Brian and Jerry, have retained minority ownership of the company they founded 14 years ago. Its leadership and executive team will remain in place, he said. HGGC bought out MWG's former investors, including the Stripes Group, a firm that invested $13 million in MWG in 2009.
Back then, said Tarrant, MWG was a 40-person company pulling in about $10 million a year. Today MWG employs more than 180 people. Tarrant told DealBook the company expects to clear $50 million in revenue this year.
"It’s time to pay them back," he said of the Stripes Group, "and reload with someone else.”
News of the deal follows reports that retail giants Amazon and Walmart are looking to enter the online grocery market. There's "a huge opportunity" in online grocery shopping, Tarrant said. People are already buying their books, music and tickets online, but they haven't shifted their grocery spending — yet. Amazon thinks it can capture that business. But MyWebGrocer's online platforms can help traditional grocery stores compete.
MyWebGrocer offers two solutions for grocery retailers — one is an online shopping platform, the other is a tool that lets shoppers plan their trip to the store. Its current clients include more than 140 grocery brands, such as Kroger and Shaw's.
MWG also provides online marketing solutions for more than 200 consumer packaged-goods brands on grocery store websites. The company boasts that it runs "the nation's largest grocery ad network with over 10 million monthly unique visitors."
MWG's strategy seems to be working; Tarrant noted that 2012 revenue was up nearly 60 percent over that of 2011. "All of our lines of business are growing," he said.
Tarrant anticipates that the HGGC investment will help the company continue that trend. Tarrant said MWG is currently looking to fill a couple dozen open positions. "If I had to guess," he added, "we’ll probably add another 50 people this year, maybe more.”
Ironically, most Vermonters still can't use MWG's tools to do their grocery shopping online. South Burlington's Healthy Living Market is the only local store that offers the service. Though Shaw's is a client, Tarrant explained that the chain is only using MWG's online planning tool. “I think of it every time I’m in the store, pushing a cart down the aisles,” he said.
That might be a disappointment, but it's also evidence of the potential for growth. The internet, Tarrant said, has revolutionized our lives, but it's still "very early" in the process. A former captain of the University of Vermont men's basketball team, Tarrant offered a sports analogy: "If this is a baseball game, we're in the second inning."
File photo of Brian, Rich Jr. and Jerry Tarrant by Matthew Thorsen.