London has emerged as a major hub for digital advertising and marketing, and today one of its faster growing startups is getting some funding to go to the next level. Yieldify, a marketing tech business that has built software to improve and track on-site and email conversions — that is, for e-commerce businesses to keep people shopping, buying and generally interested instead of going somewhere else on the web — has raised $11.5 million.
And the investors in the Series A round are nearly as strategically important as the money itself: they are SoftBank Capital — one of the world’s biggest investors in e-commerce businesses — and Google Ventures.
Yieldify, which currently works with some 800 customers, has grown its revenues 480% in the last year, which makes it one of the fastest-growing SaaS businesses in Europe at the moment. (Update: Yieldify says the monthly revenue figure we had in here earlier is incorrect so we removed it.)
Jay Radia — Yieldify’s CEO who co-founded the company with his brother Meelan (who is the CTO) after years working as a derivatives trader but developing websites as a hobby — says the funding will be used to expand in more markets — New York being one big focus — and also to staff up. The company is specifically on the lookout for more data scientists and engineers, he said in an interview.
This is only the second investment in a startup that we’ve heard coming from Google Ventures since the VC set up shop in London last year in an international push.
Its first was for another non-consumer back-end tech play — $60 million for music licensing platform specialist Kobalt, and just today it was also made public that Google Ventures has led a $9 million investment in personalised book publisher Lost My Name. We can argue elsewhere about which of these two was second or third. GV has also invested in the Oxford Science Innovation Fund.
Yieldify is addressing an area that is likely to become increasingly important in the future: helping e-commerce companies extract more sales from their site traffic. The e-commerce business is now massive: retail sales are forecast to be $28.3 trillion by 2018 according to eMarketer.
But as the industry continues to mature and early, fast growth slows up, businesses will focus a lot more on making sure that they can close the deal with a higher proportion of people who visit their sites.
This is a fairly big problem. “Ninety percent of visitors to your average shopping website don’t buy anything,” Radia said in an interview. “Right now there is still a big lack of engagement.”
“Traditional customer abandonment solutions still haven’t cracked the code to retaining and converting online visitors on the web and mobile,” said Avid Larizadeh Duggan, the general partner at Google Ventures who led its investment in the startup. “Yieldify takes a novel approach to converting visitors into customers, enabling marketers to adapt and better understand online customer intent.
The approach that Yieldify takes to tackle that draws on a mix of technologies that collectively fall under the “predictive marketing” label and represent some of the more interesting innovations in how sites are trying to break through the screen and understand more about who is visiting them.
Integrated into a site, Yieldify’s tech will track things like your mouse movements, how long you’ve been dwelling on a site with no inactivity, as well as what you have been browsing there and elsewhere. It then matches this up against a bigger database of offers and products to suggest deals to the shopper in question.
The idea is that if you can figure out what a person is after and why that person has yet to buy it, and you present it to them, you will win.
Yieldify is not the first company to come out of the gates to offer help to e-commerce businesses to improve how they sell to visitors. Companies like Avangate, Kissmetrics, and many more are arming themselves with technology to solve the marketing and e-commerce conundrum.
What has distinguished Yieldify up to now is how well it’s been doing, mostly under the radar. The company counts large businesses and brands like Marks & Spencer and Ben Sherman among its customers. It’s business model, meanwhile, is to offer its software for free and to only charge clients if they make money from Yieldify’s software. “We work on a performance basis, and so we are in real partnership with our customers,” Radia said. “Other software solutions charge big fees and it’s rare for SaaS to work as a percentage of a sale.”
On top of this, while Yieldify’s technology is “plug and play” for its business customers, Yieldify itself is regularly tinkering with the algorithms to surface the best responses. “We manage the service,” Radia said.
The end result has been good so far. Radia says that the return on investment on Yieldify can be anywhere between 10-20x with revenue “uplifts” of between five and 20 percent.
Before SoftBank and Google Ventures came along, Yieldify had raised only around $1.2 million, about a year ago, from a group that included Hoxton Ventures and Robin Klein. Radia said that while there were other VCs who were interested in investing in this Series A, Yieldify went with the two it did for very specific reasons.
SoftBank, with its VC connections to Alibaba, Snapdeal, Coupang and many other huge e-commerce operations, presents a very interesting partner to Yieldify, potentially helping the company meet and work with these large companies to keep growing.
It seems to be some of the strategy behind SoftBank’s interest, too. “By anticipating individual consumer journeys, Yieldify has proven its ability to increase conversions and generate revenue, across any channel,” said Joe Medved, partner at SoftBank Capital, in a statement. “In doing so they bring incredible value for consumer marketers and, as we see companies increasingly prioritizing new strategies for conversion optimization, the value Yieldify will add is exponential.”
Google Ventures’ investment is also a development worth watching. Today, the search giant is a huge player in search advertising, and it seems like a natural evolution for Google — which also has some e-commerce aggregating ambitions by way of Google Shopping — to move more into marketing tech alongside that.
In the meantime, the connection to Google is proving to be helpful in another way. Radia says that it’s given little Yieldify, with 120 employees, access to engineers and product people at Google, who they can use as sounding boards for things they are working on, or problems they may be facing. “These are world class people who we can now just phone up,” he said. “I’m now talking to the guy who merged Google with Doubleclick. No other VC could offer that.”