Winning Retail Tech

To our Valued Investors:

One amusing trend that we’ve seen emerging in the 21st Century has been the tacking of “tech” to a variety of words or, more frequently, to a variety of abbreviated words. The biotech sector (with names like Gilead Sciences) might have started the avalanche, but now we are hearing all about Legaltech (LegalZoom), Cleantech (Tesla), and Proptech (Zillow). Here at Iron Edge VC, we have had the privilege of early looks into the Fintech sector with extensive SoFi and Figure Technologies deals, as well as our Edtech plays in Udemy and Udacity, plus the dabbling in Foodtech we did with Impossible Foods and Eat Just, Inc. The “Sectortech” sensation might be an annoying phase that’s doomed to eventual mockery when films and television depict the post-pandemic culture of the ‘20’s, but for now this insider jargon of Silicon Valley disruptors and venture capital investors makes a lot of sense. We are, after all, deep into an era of fascinating developments that are rapidly changing the very nature of human existence. These shifts are fueled by massive amounts of capital worldwide. What’s more, we at Iron Edge are in no position to throw stones as we happily anticipate the next “tech” that will come along to help us advance our own mission.

In this spirit, private company market intelligence aggregator CB Insights released its “Retail Tech 100: The top retail tech companies of 2022” list two weeks ago. Note that we avoid the term “ranking”, as that would suggest a listing of companies in order of merit. CB’s accounting is presented in alphabetical order (assuming the 100 companies didn’t happen to line up from best to least that way as a remarkable coincidence). So, as much as we’d love to announce that our favorite retail technology outfit made the top five or even came in at number one, we’re satisfied to know that New York’s Attentive Mobile, Inc. simply made the list. In and of itself, that is an admirable feat because the field was quite crowded this year as retail technology has been gaining attention as a lucrative environment in which to dwell. More than 7,000 applicants and nominees were included in the pool of companies that use technology to reshape the shopping experience, making retail operations move faster and sell more by fostering “hyper-personalized shopping experiences, blockchain-powered commerce, autonomous delivery, virtual shopping, and more”. Attentive, of course, falls into (or, if we’re to be honest, basically defines) the category of hyper-personalized shopping. Not surprisingly, Attentive took home top honors in “Digital Shopper Engagement”.

Founded in 2016, Attentive Mobile is a personalized mobile messaging platform that massively enhances the connection between e-commerce and retail brands and consumers. The company applies Artificial Intelligence (AI) models to real-time behavioral data and then automatically sends engaging text messages to each subscriber. These messages, always appropriate for the given stage of the shopping experience, range from product recommendations and special sale notifications to “Items Left in your Cart” reminders and follow-up inquiries checking on the shopper’s experience. Attentive helps brands cut through the noise of crowded email, print, and broadcast marketing and builds trust with their subscribers using personalized, engaging text messages. Each message shares valuable information about sales, promotions, and new product launches, directly to a customer’s cell phone. The interactions are designed to mimic the way people communicate with friends and family through text messages, and they invite a two-way conversation with the consumer instead of a stream of tone-deaf pronouncements and slogans. The platform’s ability to speak directly to consumers precisely the way they want to interact — as opposed to the all-purpose marketing methods that are only able to talk “at” an anonymous and generalized audience — makes the buyer feel seen and understood, and therefore respected. It promotes in the customer a greater willingness to do business with the store repeatedly as time passes. To state the obvious, retailers are willing to pay Attentive handsomely to buy this kind of customer loyalty, as the return on investment consistently pays out many times over. This is why Attentive’s revenue has been growing at a rate that tests the limits of credibility. According to last December’s Deloitte Technology Fast 500 list, a ranking that does come in a “best-at-the-top” format, Attentive clocked in at the enviable #3 spot, well above familiar names like Snowflake, Square, Etsy, Discord, and CrowdStrike. The list, Deloitte’s annual ranking of North America’s 500 companies that boast the most impressive growth rates in the fields of technology, media, telecommunications, life sciences, fintech, and energy technologies is, in our opinion, an effective locator of undeniable pre-IPO momentum, and it told us that Attentive’s revenue growth from 2017 to 2020 was a mindboggling 49,155%. This figure is likely what drew the attention of legendary venture capital firms like IVP, Bain Capital, Coatue, Sequoia, and Tiger Global, all of whom have invested heavily in Attentive. It certainly helped to make us take notice.

Astute observers might have noticed that we used the word “subscriber(s)” twice in our description of Attentive Mobile’s business model. For those looking to “punch holes” in an investment proposal, that might raise a question or two. Specifically, one might point out that Attentive’s effectiveness relies on the consumer base’s willingness to actively accept a series of text messages from advertisers. Most people old enough to remember, say, the elder Bush administration, would likely scoff at such a willingness to welcome that kind of “intrusion”. Sadly, we who fall into that category of having been blessed with a longer history of life experiences no longer occupy the advertising community’s most coveted demographic. That distinction belongs to later millennials and Generation Z types. For many of those individuals, who range in age from the late teens to late 30’s, cell phones and the SMS messages they deliver have a truly different meaning. They take on more of a form of an extension of a lifestyle. These potential consumers are much less inclined to balk at the idea of welcoming that form of personalized discourse with a promoter of goods. Earlier this month, Globe Newswire reported that 81% of 5,000 survey respondents subscribe to text messages from at least one brand for personalized shopping experiences. 63% of those subscribers made a purchase from a text message. Almost 86% are opted into at least one VIP or loyalty program in exchange for perks and priority access. What is happening is quite clear. By transforming consumers’ mobile phones into “the new storefront”, Attentive Mobile is generating abundant customer awareness and loyalty. As scalable as these things are for the big brands that employ Attentive’s platform, one can expect retailers to continue to go back to this very deep well.

With its five-digit-percentage revenue growth and its appeal to the most substantial drivers of retail activity, Attentive has become a must-have in any well-considered private company portfolio. If its shares were available to the broader investing public, coverage and publicity would likely be moving its ticker consistently higher. Of course, Attentive is currently a privately held company, making it impossible to buy at Merrill Lynch, TD Ameritrade, Robinhood, or any other conduit to the public exchanges. Iron Edge VC can, nonetheless, provide you with access to our Funds that have ownership interests in this company that will reshape not only the way we shop, but also the bottom lines of the businesses that are selling to us. If you would like to learn more, or if you know anybody else who would, please don’t hesitate to contact us by clicking “Get in Touch” below.

If you have enjoyed this article, visit the Iron Edge Blog for past updates on our pre-IPO opportunities and for general commentary on investment in the private marketplace.

As always, shares of Iron Edge investment funds are available on a first come, first served basis.

All the Best,

Paul Maguire

Founder & Managing Partner

5f6e0d464e388c4975685025 Paul Min

Paul Maguire

Founder And Managing Partner