E-commerce vendor Optimove raises $20 million
September 14, 2016 12:32 PM
The Israeli-based online retail vendor Optimove has raised $20 million, marking the first round of funding for the eight-year-old company.
The money comes from Israel Growth Partners, a private equity investment firm that focuses on later-stage investments. Optimove, which provides customer loyalty, retention and marketing services, says it will use the money to invest in research and development and to hire marketing and sales employees, mainly for its new U.S. office in New York City.
More than 200 companies use Optimove, including e-retailers 1-800-Flowers.com Inc., No. 57 in the Internet Retailer 2016 Top 500 Guide, and eBags (No. 167). Optimove says it sends more than 4 billion targeted, personalized messages to over 900 million customers every year through email, Facebook, Google Ads, SMS (short messaging service) text messages and push notifications. Optimove has more than more than 100 employees in offices in New York, London and Tel Aviv. The company says it has achieved 100% growth over the past three years.
Optimove says it has bootstrapped its way to its present status and has never taken VC funding. “We were in a fortunate position where we never needed to raise venture capital money in order to grow, but we decided to take on a growth round at this point in the company’s evolution because we are already stable and profitable, and we are now ready to accelerate our growth,” founder and CEO Pini Yakuel says.
As part of the financing, Israel Growth Partners’ Moshe Lichtman will join Optimove’s board of directors.
Optimove also conducts research into the value of different types of customers. For example, a holiday report from the Optimove Data Lab finds that existing customers’ transactions during the holidays were 30% higher than those of new holiday shoppers; the number of items bought by existing customers was 40% higher compared with new customers; and existing customers were almost three times more likely to make at least one more purchase with the brand. Optimove’s database includes hundreds of millions of customers from more than 180 brands representing several verticals. The vendor examined millions of transactions performed between Thanksgiving and Dec. 31, for three consecutive years.
And even if new holiday customers make additional purchases, new shoppers tend to become weaker repeat shoppers compared with existing customers, the report says. “During the 12 months following their holiday shopping they make 60% less additional purchases with the brand compared to repeat shoppers,” the study says.