Investors pour $2M into Harrisburg-area startup

Data helps online retailers figure out what you want to buy, but it’s not foolproof. Sometimes, you buy things that don’t fit or don’t work — and back they go.

But even when shoes or shirts make a return trip, there is data to be gleaned.

That’s the premise behind ReturnLogic, a tech firm founded in 2014 by Peter Sobotta. The company has offices in Hampden Township, Cumberland County, and at the J.D. Brown Center for Entrepreneurship at York College in York. although its nearly two dozen employees have been working virtually since March.

“Our North Star has always been, retailers don’t have a returns problem, they have a returns data problem,” Sobotta said in an interview with BizNewsPA.

Peter Sobotta is founder and CEO of ReturnLogic. (PHOTO/SUBMITTED)

Whatever the problem, it is growing, thanks to soaring ecommerce sales during the Covid-19 pandemic. ReturnLogic is positioned to keep up thanks to $2 million in seed funding it raised this summer. The new investors include Revolution’s Rise of the Rest Seed Fund, which counts backers such as Jeff Bezos of Amazon, Steve Case of AOL and Meg Whitman, former CEO of Hewlett Packard and current CEO of streaming platform Quibi.

Other investors include Amplify.LA, Cultivation Capital, SaaS Ventures, Stout Street Capital, SpringTime Ventures and the Pennsylvania-backed Ben Franklin Technology Partners.

The money will help ReturnLogic add more engineers to accelerate product development, Sobotta said. The company employs 21 people, including four who started in early August. The staff could surpass 30 by the end of the year, Sobotta said.

To accommodate further growth, he expects to be raising additional capital within the next 12 to 18 months.

Why Central PA?

When he founded the company, Sobotta said, people told him he would never be able to raise $1 million from investors or find software developers in Central Pennsylvania. His company has now raised about $4 million overall and 18 of its employees live within 30 miles of its Cumberland County office.

“The talent was here. The company wasn’t. So part of the nexus of ReturnLogic was, let’s build it right here,”  said Sobotta, who previously founded and ran a company called ReCoupIT, which refurbished and resold used computers, cameras and other electronic equipment. He said he wound it down in order to focus on ReturnLogic, which has a higher profit margin.

ReturnLogic markets software that helps online retailers streamline returns and gather data about them. The streamlining can produce time savings within 90 days, Sobotta said. The data, meanwhile, helps companies make decisions. For example, Sobotta said, ReturnLogic can help figure out whether a 30-day or a 60-day return policy is more profitable.

“Those are very difficult questions to answer and you can’t answer them without data,” Sobotta said.

ReturnLogic is focused not on traditional retailers, which are facing a raft of financial challenges. Instead, it has focused on up-and-comers, particularly those on the Shopify platform. Examples include fast-growing sock-maker Bombas, which Sobotta sees as the future of online commerce: It combines a product with a social mission. For every pair of socks it sells, Bombas donates one to a homeless shelter.

The sense of mission is especially appealing to younger consumers, Sobotta said. “It’s a powerful movement and it’s going to continue.”

By Joel Berg, editor of BizNewsPA

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