Aussie e-commerce startup Particular Audience has raised $800,000 off the back of 400% year-on-year revenue growth, as it gears up for evolution in online shopping, and in its own product.
Headed up by British founder and chief James Taylor, Particular Audience is an AI-powered tool that identifies items from all over the web that a consumer might be interested in. Ultimately, it’s designed to help small e-commerce retailers compete with global leaders.
This latest funding round was led by existing investor Carthona Capital, as well as previous backers from Australia, the UK and Sweden.
It follows a $1.8 million seed round closed in July last year, after Taylor secured one of the few entrepreneur visas issued by the Australian government.
Since then, the startup has grown from seven people to 20, it has opened a UK office, and signed clients in the US, the Netherlands, Germany, Denmark and France.
Revenues are growing at a rate of almost 400% year-on-year.
But, the business is also evolving.
“We started life as a B2B company,” Particular Audience founder and chief James Taylor tells SmartCompany.
Currently, it’s a Software-as-a-Service solution, and that product “has been doing super well”, he says.
But, in the next few weeks, it will be launching its first consumer product.
The machine learning technology behind the startup uses natural language processes, behaviour-led machine learning and compute vision, Taylor explains.
The team is combining that tech to build “the next generation of search engines”, he says.
Currently, we use search engines by opening up a window and typing the search terms. Then, we might open different tabs to compare information from different results.
“We think that will seem totally archaic about five years from now,” Taylor says.
“We’ve developed this personal AI that preempts search intent, and layers contextually relevant information and layers contextually relevant information to people as they browse,” he explains.
“We think it’s going to be pretty big.”
Initially, Taylor and his team will roll this technology out in the retail space, because of its “wonderfully consistent data structure”, he says.
“You have your customers, retailers, items — there’s pretty clear metadata.”
But, in the long term, the plan is to expand further to service all kinds of data, services, items and statistics, he says.
An era of uncertainty
Initially, however, this latest chunk of funding will be used to build out the engineering team.
“We’re at such a scale now where things like dev ops and big data engineering become necessities,” Taylor says.
What’s a little unusual here is the size of the round. While it’s $800,000 would typically be a relatively hefty seed round, it’s less than half of what Particular Audience raised a year ago.
The startup’s investors have been supportive, Taylor says, and likely would have invested more if he’d needed it. But, he didn’t.
“Revenue has been strong. We didn’t lose any growth through COVID,” the founder says.
“Because we’re doing well from a revenue perspective, it means our burn isn’t really there,” he adds.
The cash boost will simply help the business hit the milestones it has to over the next six to 12 months, putting it in good stead to continue to grow throughout the economic uncertainty of COVID-19.
“The longer the business goes on, the stronger and stronger you get from a business metric standpoint, if everything is going well,” Taylor explains.
“There’s no point in diluting more than necessary at these stages.”
While the e-commerce sector is one that seems to be booming throughout the ongoing COVID-19 crisis, it hasn’t been an easy few months for Particular Audience, or for Taylor.
Initially, “no one really knew what was going to happen”, he says.
Investors were advising startups to cut costs and preserve capital by any means, and it wasn’t clear whether people would continue to spend online or not.
Despite the uncertainty, Taylor didn’t let any team members go, he says. Everyone took a pay cut, but he’s since been able to back pay the difference.
“It’s definitely been a stressful time, just dealing with uncertainty,” he explains.
“As a founder, you’re constantly pricing and repricing risk.”
And he’s still being cautious. This is not the time to overspend, he says.
“I don’t think the uncertainty has gone yet.”
Although government stimulus measures such as the JobKeeper program have been extended, there’s still no knowing what will happen when they do run out in 2021.
“If there are massive unemployment spikes, and discretionary spending goes down, things could be in a weaker position,” he notes.
“Has there been a bunch of forced saving and pent-up demand?”
There was an opportunity to secure some additional capital, so it made sense to take it, Taylor says.
“I expect we will probably go back to market next year and raise a much bigger round to fund the marketing expansion of the consumer product, once we’ve got product-market fit this year.”
Even once the pandemic has passed, Taylor thinks we will see lasting effects on e-commerce in Australia and around the world.
Crises like the global financial crisis and the SARS virus have proven this, he says.
“SARS changed Chinese e-commerce for good,” he notes.
And during the GFC, online retail suffered less than physical retail.
“I think that’s going to be more exacerbated this time, as well, because people haven’t been going out to stores,” he says.
Retailers are being forced to rethink how they use their physical assets, Taylor explains. Many can improve their customer experience, reduce shipping times, and improve their own margins by offering pick-up and ship-from-store services.
It’s almost a hybrid offering of online and bricks-and-mortar retail.
“A lot of them are rushing to release geo-local inventory data,” he says.
That means consumers will be able to find items that are available in their local area.
“That’s forcing a change that’s probably much overdue, that will be great for digital commerce,” Taylor says.
“Discovery online is just so much more efficient.”