While our coverage focuses on startups, it’s important to not forget the heart of most communities: the “mom and pop” businesses, or companies focused on the local market.
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Since such businesses are stereotyped as not being very tech savvy, we’ve seen a flurry of startups focused on helping them better succeed.
Last December, we reported on how San Francisco-based Faire, which operates an online wholesale marketplace for local retailers, raised $100 million across two funding rounds led by Lightspeed Venture Partners and Y Combinator’s Continuity Fund. That prompted me to write an end-of-year prediction piece about how startups focusing on local commerce could be making a resurgence in 2019. Both articles seemed to strike a chord with readers, judging by the response I got via email and on social media. And I’ve been looking for the right time since to follow up.
Now it appears that time is here. July is kicking off with two startups focused on helping local businesses raising venture funds. Signpost announced today it has raised $52 million in a “late-stage” round of funding led by HighBar Partners and including participation from Bank of Montreal (BMO) and others. With the financing, the New York-based company has raised a total of $88.6 million over time, according to its Crunchbase profile. Signpost works to help Main Street “Mom-and-Pop” service businesses automate their customer outreach campaigns. Its main strategy is to help these businesses improve their presence on Facebook, Yelp and GoogleMaps.
Also, on July 1, San Diego-based Mercato raised $4.7 million from Greycroft and others. The company, which is in about a dozen markets including New York, Chicago and Boston, has developed an online ordering and delivery platform for independent/artisan grocery stores. Mercato has raised $8.7 million in total since its inception in 2015.
The nine-year-old startup plans to use the new capital to scale its footprint and ramp up hiring across its offices in New York, Austin and Denver, with a particular emphasis on bringing on more developers, product managers and salespeople, according to founder and CEO Stuart Wall. The company says currently, “thousands” of local businesses use its platform with the goal of getting better online reviews, increase repeat business and ultimately, boost revenue numbers. Signpost maintains that it’s able to help local businesses that usually “don’t have the time or resources” to devote to marketing. It primarily works with service-based businesses, according to Wall.
So far, it’s been a good year for Signpost. The company says it achieved cash flow break-even earlier on, saw 43 percent YoY revenue growth in its core product (focused on SMBs, and representing about 75 percent of Signpost’s business) while achieving “less than one percent customer churn.”
Brian Peters, managing director at HighBar Partners, who will join Signpost’s board, said in a press release that he believes “the turnkey setup and level of automation in Signpost’s platform, as well as (its) ability to follow through on reviews and engage the modern customer well beyond their first interaction is what really sets them apart.”
Besides Greycroft, existing investor Loeb Enterprises also participated in Mercato’s latest funding round. The company plans to use the new capital to expand into new markets and continue to develop its technology and services.
As consumers continue to demand convenience, a growing number of large grocery chains and retailers such as Target, Walmart and Amazon deliver groceries these days via their own methods or third-party companies such as Instacart. In fact, according to Coresight Research, the percentage of consumers who bought groceries online between May 2018 and May 2019 surged to 36.8 percent, up from 23.1 percent year-over-year.
Also, according to eMarketer’s Grocery Ecommerce 2019 report, U.S. grocery e-commerce is estimated to be at $19.89 billion in 2019 to rank as the fastest-growing product category online.
Mercato maintains that what differentiates it from other online grocery companies is that its platform was designed specifically to meet the “unique e-commerce needs of independent grocery stores and specialty food retailers.” Through its platform, users can have groceries delivered to their home or business “in about an hour.”
Mercato co-founder and CEO Bobby Brannigan grew up working in his family grocery’s business in Brooklyn, NY, and saw firsthand the struggles that independent grocers face in the areas of technology, innovation and marketing.
“We want to level the playing field and allow these great local businesses to win against their competition, whoever it is,” he said.
Ian Sigalow, co-founder of Greycroft, said in a statement his firm has been impressed with Mercato’s technology and its “disciplined vision, strong management and vast market potential.”
The company currently offers ecommerce and same-day delivery of “high-quality groceries and specialty foods” from more than 750 independently owned stores across the country.
The Local On a Global Scale
Beyond Faire and Signpost, I also got wind of other startups focused on supporting and growing local markets. One, Localeur, is based here in Austin. The six-year-old company has created “a global community of locals who help travelers experience local by sharing their favorite local places to eat, drink and play.” Localeur began publishing a print magazine somewhat quarterly in early 2017. According to co- founder and CEO Joah Spearman, the magazine is “done 100 percent in-house, and represents a profitable segment of (its) business.”
Another is Pointy, which aims to help brick-and-mortar stores go online easily, so that customers can search and see what is being sold locally by retailers. The Dublin, Ireland-based company has partnerships with companies such as Google, Square, Lightspeed and Clover, all of which use its platform.
Irishman Mark Cummins, who happens to hold the distinction of being the first person in the UK to have a company acquired by Google – Plink in 2010), co-founded the company in 2014.
As of early January, the startup was in 1 percent of stores in the US. It raised $12 million in a Series B last year with Vulcan Capital, Polaris Partners and the founders of Google Maps, Bebo and WordPress all participating. Pointy has raised $19.2 million over time, according to its Cruncbase profile.
Pointy is outspoken about its desire to help small businesses compete with ecommerce giant Amazon. Its hope is that its technology will help more brick and mortar stories “fight back against Amazon by making their products visible online, geo-tagged, and optimized for search.” The company has a presence in the UK, and all 50 states in the US.
I’m not sure if all this validates my prediction that we’d be seeing more consumers go online this year. But it does point to the fact that investor interest in startups helping companies help local businesses is definitely there. And that makes me happy.
Illustration: Li-Anne Dias