Ocurate, a startup using artificial intelligence to predict customer lifetime value for e-commerce businesses, took in an oversubscribed seed round of $3.5 million.
Backers in the round include 8-Bit Capital, DCF Capital, Data Community Fund, AIX Ventures, Italmobiliare, Streamlined Ventures and some individual strategic angel investors like Adam Metzger and Mazen Al-Jubeir.
Tobi Konitzer, founder and CEO of Ocurate, founded the company in July to establish lifetime value as an organizing principle for business-to-consumer companies. Konitzer, who was previously co-founder and CEO of PredictWise, told TechCrunch the company’s “secret sauce” is a SaaS deep machine learning framework optimized over Ocurate’s proprietary database and customer data that exceeds 90% accuracy at predicting people’s behavior.
Currently, companies use metrics they evaluated themselves, and often look at cost per click or action and then retention. Konitzer believes lifetime value is a better prediction of how much profit a customer will bring to the company.
Ocurate’s database started with voter rolls and now has collected data from more than 300,000 Americans, he said. It also pulls data in from clients; for example, if you are a Netflix subscriber, the data might include login data, telemetry data and what was purchased in the past.
“Ocurate’s technology allows our clients to take actions on lifetime value confidently at all stages of the life cycle, which has a significant impact on our customer’s overall business with a potential increase of gross profit by over 15%,” Konitzer added. “Lifetime value should be the thing that governs everything.”
Though established five months ago, Ocurate is already working with four clients — with dozens in the pipeline — and has brought in over $400,000 in annual recurring revenue since launch.
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Two of its customers, Wild Earth and eSalon, say they are already getting good insights. Tamim Mourad, co-founder of eSalon, an e-commerce site for hair color, said that for years the company tried to build its own lifetime value model to be better at prediction, but didn’t have a data science team. With Ocurate, it can now build more accurate predictive models to better target and segment clients, and understand where the company sits historically.
Steve Simitzis, chief technology officer for pet food company Wild Earth, said he is focused on customer retention and reducing churn, but traditional methods of doing this often means chasing after customers, which is both annoying and expensive.
“What I liked about Ocurate is that they focused on giving a good sense of customers who were likely to churn so we could pinpoint our efforts,” he said. “For each customer, they give you two numbers, likely churn and how persuadable they are.”
Meanwhile, the new funding will enable Ocurate to get its product out to the public in 2022, double its team from seven employees to 14 and further invest in integrations, data science and machine learning capabilities.
Next up, the company intends to raise another round in the second quarter of 2023, and Konitzer said Ocurate is on target to have 20 customers by the end of next year.
“At the forefront of making lifetime value actionable, we have to demonstrate that we influence the way it works, but essentially, here is who you should reach out to at different points, and here is how much money to put into this,” Konitzer said. “We are building out a recommendation system.”
Optimizing customer retention will be a priority in 2020