When Paul Pearson was seeking investment for his new e-commerce venture Alphatise, he found he wasted three months trying to raise money from wealthy investors.
He says it was hard to excite already very wealthy people to invest in Alphatise with promises that it would make them millions of dollars in the future.
“We felt they loved the concept but it was too early for them,” Pearson told StartupSmart. “We couldn’t change their life.”
“Talking to a billionaire and saying we’re going to make you a billionaire is hard.”
Instead, they have successfully approached low to mid net wealth individuals who were worth $1 million to $5 million who could comfortably invest $25,000 to $50,000 or more.
They’ve raised just under $1.5 million from 45 investors, are considering a series A fundraising round in a couple of months, and planning to launch their product later this year.
Pearson describes Alphatise as an e-commerce ecosystem where consumers can post a product they want at a price they’re willing to pay. A retailer can then offer to sell them the product at that price.
The company’s website describes it as like group buying but deals are driven by active consumer interest and pricing.
Pearson says Alphatise will charge a fee for pushing offers to consumers and has the potential to help retailers lower their cost of customer acquisition.
“Our ultimate goal is to shift buyer behaviour away from the traditional consumer/retailer relationship,” he says.
He says the idea for the business came from discussing with a Macquarie Bank executive the difficulties of monetising people’s use of mobile phones.
“We know that smartphones are penetrating more than PCs ever did,” he says.
He says the company has raised all its capital so far in Australia, with one investor injecting $200,000 into the company on just the third day after they began raising funds.
“I think investors are looking at it as an opportunity to get into a technology company early,” Pearson says, adding the firm didn’t need to go to Silicon Valley to seek funding.
“We were able to raise the money locally, so we never got forced to go overseas and raise.”