Personalisation of the internet, or as Particular Audience (PA) puts it “a different website for every customer”.
Last week we announced having led PA’s Series A capital raise of $8million. Personalisation of the internet is an exciting thematic that I am passionate about but the experience also talks more broadly to ‘why investors invest’’.
The backdrop to our investment is the dramatic landscape of e-commerce today. The numbers are staggering. A $5 trillion market growing aggressively at double digits with North America alone having over $500 billion in sales annually. That said, the market is dominated by tech giants that have network effects and data moats that allow them to deliver superior experiences. Amazon accounts for a whopping 38% of all e-commerce sales in the US and, put simply, independents struggle to compete. It’s all but impossible when it’s estimated that 40% of Amazon’s revenue comes from cross-sells and recommendations that have, until now, been an experience out of reach to independent retailers. These retailers simply haven’t had the data, technology, and third-party relationships necessary to replicate this.
Enter PA
PA is, at its core, a no-code AI personalisation platform. It’s offering predominantly consists of 3 connected products that, like Amazon, allow any e-commerce retailer to provide a different website to every customer. Through the use of PA, customers such as The Good Guys, provide a personalised shopping experience. This personalisation is based on both the user’s behaviour and the retailer’s intent on-site and encompasses everything from product recommendations, search results, price comparisons, third party product ads and most of what goes into a user’s shopping experience. The product suite is holistic and unique within the world of personalisation and the impact on retailer’s conversion rates, retention and ultimately the bottom line are well established.
For PA, the approach to personalisation focusses on anonymous interaction data rather than invasive personal data (like Google and Facebook) to deliver both safer and more effective results. It doesn’t know your search history or whether you’re having an affair, it simply knows how you’ve behaved and, by reference to millions of data points on others that have behaved similarly, knows how you’re likely to behave next. The below illustrates a basic example of this:
In this example, Customer C is most similar to Customer A, and so Product C is the obvious recommendation.
Our journey joining PA is demonstrative of the psychology of venture investing and it’s different to what you might expect. I met James Taylor, the weaponized founder of PA, 1199 days before we closed our investment. It was an introduction to a pre-revenue business from a friend. She shared a co-working space with James and was a big fan. Back then however, PA looked very different. Crucially, we don’t invest pre-revenue and the business had no customers. Notwithstanding, James made an effort to find a warm intro (which isn’t a requirement, my email address is in my Linkedin bio) and more importantly, he did everything to stay in touch with an investor that said ‘no’. We have had numerous catch ups and coffees over the last 3 years and he was able to help me plot the data points in our minds that would lead to a solid Series A at a valuation commensurate with his performance. Beyond that, by the time we invested, we had mutual trust, the key ingredient of all investments.
In VC circles, it is often said; investors invest in lines, not dots. Essentially, investors plot your progress to form a cohesive story and arrive at an investment decision. If you can help an investor do this, you’re far more likely to get a positive outcome. In our case, on average we know founders for 15 months. This isn’t always the case, we are nimble and move quickly but like James’ pre revenue venture, not all businesses are ready when we meet them and not all investors are ready when you meet them. Investing in stakeholder management both before and after investment is key and some do this better than others. As the old saying goes: “if you want money, ask for advice, if you want advice, ask for money”. It is this process of relationship building and revealing your plans and executing on them over time that so often leads to positive outcomes. It is often overlooked by focusing on the $$$ and in doing so, missing the key ingredient, relationships. (pause to applaud the founders that are taking the time to provide regular investors updates to people in their network)
All of this said, relationships alone are not enough. In the case of PA, our initial ‘dating’ underpins a novel approach to an enormous problem and stellar economics. PA is growing at nearly 300% YoY. Its net revenue retention is over 150%, it has contracted revenue that will alone 2x the business and the team is awesome. They have been leaders within aligned software verticals and they intimately understand the problem they are solving. Critically, they know that algorithms are a commodity and that their moat rests in their customer base and the way they deliver outcomes using product, not in the algorithms. They know how to commercialise. Critically, the thematic is obvious. Our world will become ever more digitised and alongside that, will come ever more opportunity to make each of our digital worlds personal. This is fundamental to increasing the efficiency of our world and in doing so, the profitability of PA’s customers.
Here we have the trifecta. The team, the business and the thesis and critically, it’s all packaged within a relationship setup for success. In this way PA is positioned to become the backbone of each of our personalised engagements with the internet, that’s why we invested.
Personalisation of the internet, or as Particular Audience (PA) puts it “a different website for every customer”.
Last week we announced having led PA’s Series A capital raise of $8million. Personalisation of the internet is an exciting thematic that I am passionate about but the experience also talks more broadly to ‘why investors invest’’.
The backdrop to our investment is the dramatic landscape of e-commerce today. The numbers are staggering. A $5 trillion market growing aggressively at double digits with North America alone having over $500 billion in sales annually. That said, the market is dominated by tech giants that have network effects and data moats that allow them to deliver superior experiences. Amazon accounts for a whopping 38% of all e-commerce sales in the US and, put simply, independents struggle to compete. It’s all but impossible when it’s estimated that 40% of Amazon’s revenue comes from cross-sells and recommendations that have, until now, been an experience out of reach to independent retailers. These retailers simply haven’t had the data, technology, and third-party relationships necessary to replicate this.
Enter PA
PA is, at its core, a no-code AI personalisation platform. It’s offering predominantly consists of 3 connected products that, like Amazon, allow any e-commerce retailer to provide a different website to every customer. Through the use of PA, customers such as The Good Guys, provide a personalised shopping experience. This personalisation is based on both the user’s behaviour and the retailer’s intent on-site and encompasses everything from product recommendations, search results, price comparisons, third party product ads and most of what goes into a user’s shopping experience. The product suite is holistic and unique within the world of personalisation and the impact on retailer’s conversion rates, retention and ultimately the bottom line are well established.
For PA, the approach to personalisation focusses on anonymous interaction data rather than invasive personal data (like Google and Facebook) to deliver both safer and more effective results. It doesn’t know your search history or whether you’re having an affair, it simply knows how you’ve behaved and, by reference to millions of data points on others that have behaved similarly, knows how you’re likely to behave next. The below illustrates a basic example of this:
In this example, Customer C is most similar to Customer A, and so Product C is the obvious recommendation.
Our journey joining PA is demonstrative of the psychology of venture investing and it’s different to what you might expect. I met James Taylor, the weaponized founder of PA, 1199 days before we closed our investment. It was an introduction to a pre-revenue business from a friend. She shared a co-working space with James and was a big fan. Back then however, PA looked very different. Crucially, we don’t invest pre-revenue and the business had no customers. Notwithstanding, James made an effort to find a warm intro (which isn’t a requirement, my email address is in my Linkedin bio) and more importantly, he did everything to stay in touch with an investor that said ‘no’. We have had numerous catch ups and coffees over the last 3 years and he was able to help me plot the data points in our minds that would lead to a solid Series A at a valuation commensurate with his performance. Beyond that, by the time we invested, we had mutual trust, the key ingredient of all investments.
In VC circles, it is often said; investors invest in lines, not dots. Essentially, investors plot your progress to form a cohesive story and arrive at an investment decision. If you can help an investor do this, you’re far more likely to get a positive outcome. In our case, on average we know founders for 15 months. This isn’t always the case, we are nimble and move quickly but like James’ pre revenue venture, not all businesses are ready when we meet them and not all investors are ready when you meet them. Investing in stakeholder management both before and after investment is key and some do this better than others. As the old saying goes: “if you want money, ask for advice, if you want advice, ask for money”. It is this process of relationship building and revealing your plans and executing on them over time that so often leads to positive outcomes. It is often overlooked by focusing on the $$$ and in doing so, missing the key ingredient, relationships. (pause to applaud the founders that are taking the time to provide regular investors updates to people in their network)
All of this said, relationships alone are not enough. In the case of PA, our initial ‘dating’ underpins a novel approach to an enormous problem and stellar economics. PA is growing at nearly 300% YoY. Its net revenue retention is over 150%, it has contracted revenue that will alone 2x the business and the team is awesome. They have been leaders within aligned software verticals and they intimately understand the problem they are solving. Critically, they know that algorithms are a commodity and that their moat rests in their customer base and the way they deliver outcomes using product, not in the algorithms. They know how to commercialise. Critically, the thematic is obvious. Our world will become ever more digitised and alongside that, will come ever more opportunity to make each of our digital worlds personal. This is fundamental to increasing the efficiency of our world and in doing so, the profitability of PA’s customers.
Here we have the trifecta. The team, the business and the thesis and critically, it’s all packaged within a relationship setup for success. In this way PA is positioned to become the backbone of each of our personalised engagements with the internet, that’s why we invested.