Startup News & Analysis

AI-fuelled online beauty platform Honee raises $1.8 million in seed round led by Blackbird Ventures

Dominic Powell /

Honee

Honee co-founder Matt Jones. Source: Supplied.

For Matt Jones, the key things that led to his startup Honee’s capital raising success were persistence, perseverance, and boots on the ground.

The Melbourne-based startup offers beauty and wellness salons an online end-to-end booking service and online shopfront, and was born from the realisation that the majority of Australian salons don’t currently take bookings online. Of 10,000 salons across Sydney and Melbourne surveyed by the Honee team, less than 40% had a web presence and 0.2% of bookings were made online.

Jones and his co-founders Nicole So, Alexander Groom and Nick Chang set out to change this, and since the platform’s launch in early 2016, have signed up over 10,000 venues across Sydney and Melbourne offering more than 200,000 services.

“Salons on Honee are getting a total of around four million page views a month now from Google, but beforehand they were getting none of that,” Jones tells StartupSmart.

Jones has a history in the business-focused online listings space, having worked at Delivery Hero and Zomato. He says the idea for Honee came to him while he was still working at Zomato; at the basement of his building, there was a small salon and the owner would regularly ask Jones to “do a Zomato for my industry”.

“I found out he had paid five grand to get someone to do a website for him which ended up being a WordPress template I found online for $60,” he says.

“I realised then that these guys needed more help, with not just websites, but also business advice.”

That’s where the founders got the idea for the startup’s AI-powered chatbot and business information service ‘Nectar’, which allows business owners to ask a number of different questions about their business and receive an answer immediately.

While the team was having success getting salons more customers through Honee’s online listing service, Jones says after continuing to talk to salon owners he realised he was looking at the wrong side of the business.

“People who are looking for a new salon are the smallest part of the market. Most customers know where they want to go, so we realised there was an opportunity to help with the regulars,” he says.

“When we were building Nectar we went to 15 different salons and got them to help build it with us and get their advice when it came to data, graphs, and reports. But we then realised, no matter what we put online, people would still ping us on WhatsApp to ask things about income reports and the like.

“We’d get so many requests daily I had two staff responding to them pretty much full-time, and that’s when the idea of a chatbot hit me.”

Blackbird leads $1.8 million seed round

A handful of angel investors and venture capital firm Blackbird Ventures contributed to Honee’s $1.8 million seed raise, which ranks in the higher levels when it comes to seed raises in Australia. The startup had access to the funding after coming through Blackbird’s Startmate incubator, where it had already received $75,000 in funding.

Jones says the new funding will be used largely to continue to develop Honee’s technology and fuel expansion to Sydney, where he estimates the salon market is five to 10 times the size of Melbourne.

“The foundational insight of Honee that we were attracted to, is that great beauty businesses want help in serving happy, repeat customers rather than just constantly acquiring new ones,” Niki Scevak, co-founder of Blackbird Ventures, said in a statement.

“Matt and the team at Honee are a force of nature and we’re ecstatic to welcome them into the Blackbird family.”

Reflecting on his raise process, one thing Jones says he didn’t expect was how warm and welcoming the startup and VC community was, saying he pitched most major VCs for funding for Honee and found they were all “really supportive” and surprisingly easy to get a meeting with.

“At the same time, you’d get a very quick yes or no from them, but as someone who hasn’t raised before I thought it would be a lot more intimidating,” he says.

“I also thought they were going to sit down and pore over every spend and every credit card statement from the company and all that crazy stuff you see in Silicon Valley, but it was nothing like that. They just said we trust you and back you and I really felt that through the raising process.

“Persistence pays, so be consistent, and if you’re passionate and believe in your idea, don’t give up.”

NOW READ: Blackbird Ventures head of operations Samantha Wong on the biggest mistakes Aussie founders make when pitching

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Dominic Powell

Dominic Powell is the lead reporter at StartupSmart.

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