It turns out geography is still a thing.
Recently, Whittl, a Chicago-based company raised a $3.3 million Series A round of capital. The new monetary event follows a $1.3 million seed round that took place around two years ago.
If you can’t see the irony, you haven’t lived outside of the Valley in some time. Given the generic chop of both Clinkle and Secret, it’s hard to keep in mind that not every company is desperate to raise ahead of its product, execution and plans. Whittl, as its co-founder Mike Zivin told TechCrunch on a phone call, has focused on its unit economics, and, to repeat myself, proving its model. So the cost to build the firm so far is less than you might have anticipated.
Whittl connects consumers to local businesses. Its mobile app wants to help you find services like haircuts, and so forth. According to Zivin, the company was initially focused on providing price lists for a variety of local services, but its customers wanted the firm to complete the wheel and allow them to book appointments from the app. The company subsequently built out the functionality.
Unlike a host of other firms that are currently active inside of technology, Whittl has been conservative in its expansion. The firm’s minor seed raise floated it for two years — the Chicago focus on frugality and revenue still lives, in case you forgot — implying a lower cost structure than we might expect here in the Valley.
Zivin told TechCrunch that his firm takes an average 17.5 percent cut of services booked through the platform, but that percentage declines over time — the longer a client uses the app, the less Whittl will deduct for its own coffers. Consider this a material example of deprecated future cash flows, but in reverse.
I asked the co-founder if the firm was expecting to take up its — admittedly modest — burn, and he agreed, noting a year as a reasonable time-frame for his next capital raise. But Zivin repeated his former point that the company aims to be capital efficient. With its new monies, it plans to expand to four new markets this year.
In short, the firm thinks that its model that has worked so far in Chicago will convert to other markets. The answer will rest on its execution.