Exclusive: AppHub, a Shopify app acquirer, raises $95 million to build and buy apps as the developer ecosystem matures

• AppHub has raised $95 million from growth-equity firm PSG.
• AppHub builds and acquires apps that are geared towards e-commerce merchants.
• With its most recent acquisition Boost, it now has more than 25 apps in its portfolio.

AppHub, an e-commerce enablement platform launched in 2021, has raised $95 million in funding from growth equity firm PSG to continue expanding its app portfolio as changes to Shopify’s app ecosystem occur.

The startup creates and acquires apps for online sellers. Its app portfolio includes over 25 apps, including REVIEWS.io, which allows sellers to collect text, video, and photo reviews on their online stores, and Orderbump, which is an in-checkout and post-purchase upselling app.

On Tuesday, AppHub also announced the acquisition of Boost, an AI-powered search and discovery app, for an undisclosed sum.

According to CEO and cofounder Kris Eng, more than 150,000 merchants are now using AppHub apps. Those merchants sell on a variety of e-commerce platforms, including BigCommerce and WooCommerce, but the majority are on Shopify, according to Eng.

Shopify’s App Store contains over 10,000 apps that assist merchants with tasks such as store design, product sourcing, search engine optimization, marketing, and shipping.

This app ecosystem is maturing, with big players like Klaviyo and Attentive preparing for IPOs and other smaller players becoming attractive acquisition targets as venture capital becomes more difficult to raise. This could present an opportunity for companies such as AppHub.

Shopify leaders such as CEO Tobi Lütke and President Harley Finkelstein, according to Eng, have created an ecosystem that is “amazing for developers like us.”

“They continue to push APIs, ecosystems, and different foundational areas for us to build in,” he explained.

Shopify recently unveiled Sidekick, an AI-powered assistant designed to help merchants get answers to questions about running their stores. It also includes the Shop app, which allows customers to discover products from Shopify merchants as well as track incoming orders after they’ve been shipped.

According to Matt Tennenhouse, AppHub’s director of M&A, these innovations are not intended to compete with existing third-party apps, but rather to provide additional opportunities for developers to build upon.

“There’s going to be continued momentum, continued ways to be creative, find new solutions, and further unlock growth for merchants,” Tennenhouse told Insider. “So, even with consolidation, I believe there will continue to be a plethora of different opportunities for us and other companies to enter the ecosystem and make an impact.”

Deciding whether to build or acquire

On a case-by-case basis, AppHub decides whether to acquire an app or develop its own solution.

The AppHub team felt that Boost could solve a very specific — but complex — pain point for merchants in the case of its most recent acquisition. Its technology can, for example, use a shopper’s previous search history to generate more personalized recommendations.

“For example, if someone searches for a men’s shirt and then searches for shoes a few minutes later, being able to pick up and evaluate, okay, I’m going to list the most-recommended as men’s shoes,” Tennenhouse explained. “I believe that type of AI and machine learning will significantly help merchants drive conversion.”

However, for other categories, it may make more sense for AppHub to create a solution from the ground up.

“There are areas where the category is less mature or there are no clear winners, so we’ll go try to build one,” Eng explained.

“We are entrepreneurs, but at our core, we are developers as well,” he added. “We tend to take a very balanced approach to what we’re doing because we have to create value in both ways.”

Eng claims that AppHub is profitable. In early 2022, the company raised $60 million from growth equity firm Silversmith Capital Partners.

The new PSG funding will allow AppHub to continue investing in its existing portfolio while also looking for new apps to acquire.

“In our opinion, AppHub has a one-of-a-kind opportunity to lead a dynamic and fragmented e-commerce market,” PSG Managing Director Matt Stone told Insider. “The company’s strong growth profile demonstrates the value of its software solutions to the merchant community, and we look forward to working with the team as it expands its platform and positions merchants for success.”