E-commerce startup Preezie has secured $575,000 in seed funding, from Skalata Ventures and a handful of angel investors, during what’s been touted as a particularly tricky time to find early-stage capital.
Preezie provides e-commerce retailers with a tool that quizzes customers on what they’re looking for, including preferences and price-point. It then directs them to products that meet their criteria.
It’s designed to bring the feel of personalised assistance to online sales, and therefore boost conversions.
The startup was founded by Quoc Nguyen, Michael Tutek and Luke Milkovic three years ago, and joined the Skalata Ventures accelerator program in 2019.
During the six-month program, the founders revitalised the brand and messaging, and saw a 50% revenue jump as a result.
This funding round includes follow-on investment from Skalata, and also includes angel investors Anthony Klein, a partner of PwC Australia, Trevor Nelson, former chief technology officer of PEXA, and Leigh Warren, former managing director at Oracle.
“We were growing at quite a fast rate,” Tutek tells SmartCompany.
However, in what has become a familiar story, the COVID-19 pandemic threw a spanner in the works.
“Our growth was exponential, and then COVID slowly tapered that off,” the founder adds.
“There was a general shellshock,” Tutek says.
For retailers that have both bricks-and-mortar and online stores, the priority was on risk mitigation, and figuring out how to manage the situation.
But, in the past two or three weeks, things have turned around again, and business is picking up “significantly more than ever before”, he adds.
“We’ve picked up more customers in the last two to three weeks than we picked up in the previous few months.”
Preezie co-founder and chief financial officer Quoc Nguyen explains that many of the clients the startup was in discussions with just put those discussions on hold.
Now, retailers are “realising that the new normal is not what we’re used to”, he says.
The pandemic has caused a boost to e-commerce, he explains.
“COVID-19 has just opened the eyes of some of these omnichannel retailers in particular, where they really need to prove their customer experience.”
And, as the worst of the health crisis in Australia seems to have passed, and as restrictions start to ease, these businesses are figuring out how to move forward in a post-pandemic landscape.
“They’ve got plans now to push forward,” Nguyen says.
“It’s allowed people to think about how to run and improve their business going forward.”
With an economic crisis underway and an uncertain future ahead of us, it has been suggested that now may not be the best time for securing startup funding. It’s also been suggested that seed and angel capital will be the trickiest to get your hands on.
Not only has Preezie secured the cash, but the founders also opened and closed the funding round within a month.
The plan had always been to raise after completing the Skalata Ventures program, Nguyen explains.
“When COVID-19 hit, I’ll be honest with you … we sat and thought, ‘is this going to be a hard time?’
“I was relatively surprised by the level of interest from angel investors … even with COVID-19 overhang.”
On the one hand, some of the investors suggested they might have invested more had there not been a pandemic underway. On the other, this startup is in one of those sectors that the crisis is likely to accelerate.
One of the investors, Tutek recalls, told the founders he had never really purchased anything online before. COVID-19 meant he had to for the first time.
“He said the experience was really bad,” he says.
“That was almost the catalyst.”
According to Tutek, the investor clearly understood in that moment what the pain-point was, and the value proposition Preezie had to offer.
And, even though angels may be a little more reserved with their investments, there are also fewer businesses it makes sense to invest in. While sectors such as hospitality and travel are struggling, telehealth, edtech and of course e-commerce are on the up.
“If you happen to be in one of those growing areas … all of a sudden, I believe that you look more attractive,” Tutek says.
“The narrative works its way towards you naturally.”
This funding gives Preezie the capital boost it needs to continue growing over the next 12 months, and to take advantage of the opportunity at hand, the co-founders explain.
The plan is to work towards a Series A round in about a year’s time.
But, this round was about more than money.
“We really wanted the right strategic investors,” Tutek says.
“We didn’t go out to everybody, we just approached a handful who we thought were the right people for us.”
Over the past year or more the co-founders have been identifying their ideal investor types, and doing their homework on who would be a suitable fit for the business, Nguyen adds. Then, they spent time getting to know them.
“We’ve spoken to them before, we’ve touched base, we’ve conversed with them, we’ve had coffee,” he explains.
“The fact that we did the ‘get-to-know-you’ prep work — then obviously going out and doing the raise amid the pandemic — it resonated,” he adds.
“We’re rapt with the investors we’ve got on board.”
The investors bring value in terms of contacts, tech capability, support with the business roadmap, and more, Nguyen says.
“We couldn’t be more rapt, closing the round out with dollars, but also some investor capability.”