Jul
29
2021
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ConverseNow is targeting restaurant drive-thrus with new $15M round

One year after voice-based AI technology company ConverseNow raised a $3.3 million seed round, the company is back with a cash infusion of $15 million in Series A funding in a round led by Craft Ventures.

The Austin-based company’s AI voice ordering assistants George and Becky work inside quick-serve restaurants to take orders via phone, chat, drive-thru and self-service kiosks, freeing up staff to concentrate on food preparation and customer service.

Joining Craft in the Series A round were LiveOak Venture Partners, Tensility Venture Partners, Knoll Ventures, Bala Investments, 2048 Ventures, Bridge Investments, Moneta Ventures and angel investors Federico Castellucci and Ashish Gupta. This new investment brings ConverseNow’s total funding to $18.3 million, Vinay Shukla, co-founder and CEO of ConverseNow, told TechCrunch.

As part of the investment, Bryan Rosenblatt, partner at Craft Ventures, is joining the company’s board of directors, and said in a written statement that “post-pandemic, quick-service restaurants are primed for digital transformation, and we see a unique opportunity for ConverseNow to become a driving force in the space.”

At the time when ConverseNow raised its seed funding in 2020, it was piloting its technology in just a handful of stores. Today, it is live in over 750 stores and grew seven times in revenue and five times in headcount.

Restaurants were some of the hardest-hit industries during the pandemic, and as they reopen, Shukla said their two main problems will be labor and supply chain, and “that is where our technology intersects.”

The AI assistants are able to step in during peak times when workers are busy to help take orders so that customers are not waiting to place their orders, or calls get dropped or abandoned, something Shukla said happens often.

It can also drive more business. ConverseNow said it is shown to increase average orders by 23% and revenue by 20%, while adding up to 12 hours of extra deployable labor time per store per week.

Company co-founder Rahul Aggarwal said more people prefer to order remotely, which has led to an increase in volume. However, the more workers have to multitask, the less focus they have on any one job.

“If you step into restaurants with ConverseNow, you see them reimagined,” Aggarwal said. “You find workers focusing on the job they like to do, which is preparing food. It is also driving better work balance, while on the customer side, you don’t have to wait in the queue. Operators have more time to churn orders, and service time comes down.”

ConverseNow is one of the startups within the global restaurant management software market that is forecasted to reach $6.94 billion by 2025, according to Grand View Research. Over the past year, startups in the space attracted both investors and acquirers. For example, point-of-sale software company Lightspeed acquired Upserve in December for $430 million. Earlier this year, Sunday raised $24 million for its checkout technology.

The new funding will enable ConverseNow to continue developing its line-busting technology and invest in marketing, sales and product innovation. It will also be working on building a database from every conversation and onboarding new customers quicker, which involves inputting the initial menu.

By leveraging artificial intelligence, the company will be able to course-correct any inconsistencies, like background noise on a call, and better predict what a customer might be saying. It will also correct missing words and translate the order better. In the future, Shukla and Aggarwal also want the platform to be able to tell what is going on around the restaurant — what traffic is like, the weather and any menu promotions to drive upsell.

 

Apr
09
2021
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SnackMagic picks up $15M to expand from build-your-own snack boxes into a wider gifting marketplace

The office shut-down at the start of the COVID-19 pandemic last year spurred huge investment in digital transformation and a wave of tech companies helping with that, but there were some distinct losers in the shift, too — specifically those whose business models were predicated on serving the very offices that disappeared overnight. Today, one of the companies that had to make an immediate pivot to keep itself afloat is announcing a round of funding, after finding itself not just growing at a clip, but making a profit, as well.

SnackMagic, a build-your-own snack box service, has raised $15 million in a Series A round of funding led by Craft Ventures, with Luxor Capital also participating.

(Both investors have an interesting track record in the food-on-demand space: Most recently, Luxor co-led a $528 million round in Glovo in Spain, while Craft backs/has backed the likes of Cloud Kitchens, Postmates and many more.)

The funding comes on the back of a strong year for the company, which hit a $20 million revenue run rate in eight months and turned profitable in December 2020.

Founder and CEO Shaunak Amin said in an interview that the plan will be to use the funding both to continue growing SnackMagic’s existing business, as well as extend into other kinds of gifting categories. Currently, you can ship snacks anywhere in the world, but the customizable boxes — recipients are gifted an amount that they can spend, and they choose what they want in the box themselves from SnackMagic’s menu, or one that a business has created and branded as a subset of that — are only available in locations in North America, serviced by SnackMagic’s primary warehouse. Other locations are given options of pre-packed boxes of snacks right now, but the plan is to slowly extend its pick-and-mix model to more geographies, starting with the U.K.

Alongside this, the company plans to continue widening the categories of items that people can gift each other beyond chocolates, chips, hot sauces and other fun food items, into areas like alcohol, meal kits and nonfood items. There’s also scope for expanding to more use cases into areas like corporate gifting, marketing and consumer services, as well as analytics coming out of its sales.

Amin calls the data that SnackMagic is amassing about customer interest in different brands and products “the hidden gem” of the platform.

“It’s one of the most interesting things,” he said. Brands that want to add their items to the wider pool of products — which today numbers between 700 and 800 items — also get access to a dashboard where they monitor what’s selling, how much stock is left of their own items, and so on. “One thing that is very opaque [in the CPG world] is good data.”

For many of the bigger companies that lack their own direct sales channels, it’s a significantly richer data set than what they typically get from selling items in the average brick and mortar store, or from a bigger online retailer like Amazon. “All these bigger brands like Pepsi and Kellogg not only want to know this about their own products more but also about the brands they are trying to buy,” Amin said. Several of them, he added, have approached his company to partner and invest, so I guess we should watch this space.

SnackMagic’s success comes from a somewhat unintended, unlikely beginning, and it’s a testament to the power of compelling, yet extensible technology that can be scaled and repurposed if necessary. In its case, there is personalization technology, logistics management, product inventory and accounting, and lots of data analytics involved.

The company started out as Stadium, a lunch delivery service in New York City that was leveraging the fact that when co-workers ordered lunch or dinner together for the office — say around a team-building event or a late-night working session, or just for a regular work day — oftentimes they found that people all hankered for different things to eat.

In many cases, people typically make separate orders for the different items, but that also means if you are ordering to all eat together, things would not arrive at the same time; if it’s being expensed, it’s more complicated on that front too; and if you’re thinking about carbon footprints, it might also mean a lot less efficiency on that front too.

Stadium’s solution was a platform that provided access to multiple restaurants’ menus, and people could pick from all of them for a single order. The business had been operating for six years and was really starting to take off.

“We were quite well known in the city, and we had plans to expand, and we were on track for March 2020 being our best month ever,” Amin said. Then, COVID-19 hit. “There was no one left in the office,” he said. Revenue disappeared overnight, since the idea of delivering many items to one place instantly stopped being a need.

Amin said that they took a look at the platform they had built to pick many options (and many different costs, and the accounting that came with that) and thought about how to use that for a different end. It turned out that even with people working remotely, companies wanted to give props to their workers, either just to say hello and thanks, or around a specific team event, in the form of food and treats — all the more so since the supply of snacks you typically come across in so many office canteens and kitchens were no longer there for workers to tap.

It’s interesting, but perhaps also unsurprising, that one of the by-products of our new way of working has been the rise of more services that cater (no pun intended) to people working in more decentralised ways, and that companies exploring how to improve rewarding people in those environments are also seeing a bump.

Just yesterday, we wrote about a company called Alyce raising $30 million for its corporate gifting platform that is also based on personalization — using AI to help understand the interests of the recipient to make better choices of items that a person might want to receive.

Alyce is taking a somewhat different approach than SnackMagic: it’s not holding any products itself, and there is no warehouse but rather a platform that links buyers with those providing products. And Alyce’s initial audience is different, too: instead of internal employees (the first, but not final, focus for SnackMagic) it is targeting corporate gifting, or presents that sales and marketing people might send to prospects or current clients as a please and thank you gesture.

But you can also see how and where the two might meet in the middle — and compete not just with each other, but the many other online retailers, Amazon and otherwise, plus the consumer goods companies themselves looking for ways of diversifying business by extending beyond the B2C channel.

“We don’t worry about Amazon. We just get better,” Amin said when I asked him about whether he worried that SnackMagic was too easy to replicate. “It might be tough anyway,” he added, since “others might have the snacks but picking and packing and doing individual customization is very different from regular e-commerce. It’s really more like scalable gifting.”

Investors are impressed with the quick turnaround and identification of a market opportunity, and how it quickly retooled its tech to make it fit for purpose.

“SnackMagic’s immediate success was due to an excellent combination of timing, innovative thinking and world-class execution,” said Bryan Rosenblatt, principal investor at Craft Ventures, in a statement. “As companies embrace the future of a flexible workplace, SnackMagic is not just a snack box delivery platform but a company culture builder.”

Feb
03
2021
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Scratchpad snags $13M Series A to simplify Salesforce data entry

Scratchpad is an early-stage startup that wants to make it easier for sales people to get information into Salesforce by placing a notation layer on top of it. Today, it announced a $13 million Series A led by Craft Ventures with participation from Accel.

The company has now raised a total of $16.6 million, including the $3.6 million seed round we covered in October. Co-founder and CEO Pouyan Salehi says that he wasn’t really looking to add capital, but the investors understood his vision and the money will help accelerate the product roadmap.

“To be honest, it actually wasn’t on our radar to raise again so soon after we raised what I consider a substantial seed. We had plenty of runway, but we started to see a lot of bottom-up user growth, this bottom-up motion just really started to take hold,” Salehi told me.

He says that lead investor David Sacks, who has built some successful startups himself, really got what they were trying to do, and the deal came together fairly easily. In fact, the company caught the attention of Craft because they were hearing about Scratchpad from their portfolio companies.

The bottoms up approach is certainly something we have seen with developer tools and with software for knowledge workers, but companies often take aim at sales through the sales manager, rather than trying directly to get salespeople to use a particular tool. This approach of getting the end users involved early allows them to gain traction with members of the sales team before approaching management about paid versions.

Traditionally, sales teams don’t like the tools that are thrust upon them. They are essentially databases and even with a visual interface, it doesn’t really match up with the way they work. Scratchpad gives them an interface like a spreadsheet or notes application that they are typically using to hack together a workflow, but with a direct connection to Salesforce.

What the paid tiers provide is a way to bring all this data together and get a bigger-picture view of what’s happening on the sales team, and it helps ensure that people are using Salesforce because the data in Scratchpad links to the Salesforce database automatically.

The company has completed the initial work of building the individual salesperson’s workspace, but the next phase, and part of what this capital is going to fund, is building the team workspace and seeing how this data can flow from individuals to a team view to give management more insight into what their individual reps are doing. This includes notes, which usually don’t make it into Salesforce, but provide a lot of context about interactions with customers.

It’s resonating with thousands of users (although Salehi didn’t want to share an exact customer number just yet). Customers include Autodesk, Brex, Lacework, Snowflake and Twilio.

Sacks says that he liked the viral way the product has been spreading. “Once a rep starts using Scratchpad, two things tend to happen: it becomes a daily habit, and they share it with their teammates. This phenomena of viral spread is rare and indicates a very strong product-market fit,” he said in a statement.

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