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Montreal’s Beyond the Rack Secures $10 Million Facility from Silicon Valley Bank

mobilebtrMontreal ecommerce fashion retailer Beyond the Rack has secured a debt financing facility from Silicon Valley Bank for $10 million. A facility is an agreement to advance money to a company in order to accomplish a specific activity. It’s basically a loan.

Silicon Valley Bank is a subsidiary of SVB Financial Group, which dedicates itself to financing the North American tech scene.

CEO Yona Shtern plans to dedicate the funds to marketing and to expanding Beyond the Rack’s product offering, perhaps venturing into Beyond the Rack branded clothing. As it stands, Beyond the Rack offers a few non-clothing branded items, such as pillows and shoe racks, accounting for approximately 2% of its overall revenue.

By contrast, Montreal clothing retailer Frank & Oak offers its own clothing line and started out making its name online before opening a brick-and-mortar store in the Mile End district.


Beyond the Rack has raised almost $80 million since launching in 2009, and despite having a 13 million-strong membership has yet to turn a profit.

The company does have a roadmap to profitability, however. It’s betting that mobile revenue will eventually eclipse the desktop and brick-and-mortar shopping habits of consumers. This will almost certainly eventually happen, but it’s a risky bet for a company that’s bleeding out money in the meantime.

Nearly 40% of Beyond the Rack’s sales come from purchases made on mobile devices. The company noticed that where the average purchase made by shoppers using a desktop computer was approximately $100, the average spent by customers making a purchase via mobile was $170. Thus the decision to double down on mobile.

It’s a game of nerves for Beyond the Rack, and for every other company betting on the mobile commerce future. Consumer habits are slowly but surely changing. If Beyond the Rack can hang in there long enough, though, it may find that profitability is the new black.

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