Closely, the maker of Perch, a social analytics app for small businesses, has raised $3 million in a series A round of funding led by Grotech ventures. Amid a chaotic local marketing industry, the company has quietly built out a novel business model which draws on learnings from the consumer world to solve one of the most dire problems in the business technology industry: selling to small businesses.
The application, which launched in beta two years ago, aggregates chatter about a business and its competitors from social media, review sites, and other sources into a single stream, offering a small business owner a window in its evolving digital presence. Post a picture on Instagram from a favorite brunch place, or make a snarky comment on Yelp, and a Perch will make sure the business owner — or its competitor – will see it, and can respond in kind.
The service can also provide recommendations to business owners, using the aggregate data from its users to decide when a business needs to post another photo to Instagram or respond to a review on Yelp. More importantly, the service can recommend a third-party product — say, GoDaddy’s website builder — to a small business owner based on the data which it collects about the merchant’s digital presence.
What’s particularly creative, and what likely earned the company funding, isn’t the app itself — it’s the model for making money. The Denver-based startup plans to support the application by building a B2B marketing product on top of that recommendation engine, allowing the thousands of technology companies that sell to small businesses to promote their products to merchants in need of their services.
“There’s this highly inefficient system in local [technology] where 95% of the marketing spent [by vendors] falls off the table because they don’t get anywhere,” says Perry Evans, chief executive at Closely. “We think there’s a marketplace that needs to emerge from the B2B point of view, which helps small businesses better understand where they need to invest their attention, and then efficiently creating a way for the attention of the business to be connected to high-caliber products that sit on the other side of the market.”
The company has already signed agreements with GoDaddy, DudaMobile, and Constant Contact, and plans to use the new capital to bring more vendors into the marketplace. Evans says the startup hopes to bring a spectrum of new providers into the marketplace, ranging from marketing and CRM tools to more advanced commerce and analytics technologies.
For Closely, the model allows the company to participate in the local technology market without competing in an increasingly busy, and capital-intensive, fight for small businesses marketing budgets. In the last two months alone, Yodle and GoDaddy — two of the largest contenders in small business marketing — have reportedly shopped for banks to underwrite a public offering.
What that means is a lot more capital in the hands of fewer players. And after some consolidation these firms will likely start to pour capital into marketing campaigns and channel partnerships with companies like Closely, which have the ear of small businesses.
Other companies have looked to build marketplaces for small businesses vendors, but they’re largely platform plays aimed at expanding the capabilities of a given product (think of Apple’s AppStore) On Monday, Leaf, a point-of-sale startup released a marketplace through which payment processors can market to merchant via the company’s system. The company is likely generating incremental revenues, but the reach is largely limited to commerce and other operations-related services.
Steven Jacobs is Street Fight’s deputy editor.