Dear Startup Investor,
We recommended Privy last September.
At the time, we were convinced that Privy was tackling and solving a big problem. And we liked its user-friendly dashboard.
To refresh your memory…
Its platform gives retailers tools that track when a customer redeems a store’s online offer.
Not only that, but it also gives retailers another option beyond loyalty programs.
The problem with these programs is that only 1% to 5% of past customers join them.
Privy has given retailers a way to reach the other 95%.
Pre-Traction No More
We basically invested in Privy pre-traction. It had 30 customers signed up at the time.
But we believed the company’s platform had great upside, along with an excellent chance of attracting customers on a massive scale.
It’s not there yet. But Privy’s CEO, Ben Jabbawy, says that in a little more than 13 months, they’ve expanded their client list to 3,500 customers.
That’s growth of over 11 times.
Privy is now signing up more than 500 new businesses every month. In September, they added 728 new businesses.
It should have 5,000 businesses on its rolls by Christmas.
We chalked up its earlier lack of traction to a still tiny sales force. They’ve beefed up their sales team since then.
And that is what allowed traction to take off – exactly what we hoped would happen.
Ben says the company has 20 million – and growing – consumers a month engaged in Privy-run campaigns. And they’re expanding the size of their major accounts for companies like Hard Rock Café and Bruegger’s.
It’s still early, but we’re impressed. Ben has shown that he can grow a company.
He expects the company will add more than 1,000 new businesses in October and reach 30,000 businesses in the next 12 months.
Adam and I see these as realistic goals, given Privy’s recent growth trajectory.
A New Raise
By the way, Privy is raising again.
It’s doing a bridge round of $250K. And it’s raising only from existing investors under a convertible note.
Ben – along with the lead investor in this round, Atlas Venture – has capped the valuation at $7 million.
That’s the same as the seed round, when several of our Startup Investor members participated. And because we were active investors in that round, Ben told me that any member of Startup Investor can participate in this bridge round.
We believed its valuation was reasonable when it was raising its seed money last year. Now that it has added strong traction numbers, we think this same level of valuation is more than fair.
By the way, Atlas has an excellent track record. Its portfolio has produced nine IPOs plus 48 companies that were bought out.
Privy has lived up to our expectations, even exceeding them.
Yet I should remind you, it’s still early. Privy is still at the beginning of a long journey. Its success is far from guaranteed.
This is the risk that comes with investing early. The reason for taking on such risk?
It’s upside. And Privy has plenty of that.
Locu – a marketplace company, like Privy, targeting small businesses – sold to GoDaddy for more than $70 million when it reached 30,000 businesses.
SinglePlatform sold for $100 million when it reached 10,000 businesses.
Keep in mind that if you wish to invest in Privy’s current round, the minimum is $10,000. Give Ben a call at 617.852.5292 if you’re interested.
Invest early and well,
Andy Gordon
