Entrepreneurs Yaw Aning and Anthony Smith are thinking big with their latest company, which was launched out of "stealth mode" Tuesday with an announcement that it raised $600,000 in early venture funding.
The company, Malomo Inc., has created a software package that lets businesses weave marketing messages into shipment notifications and updates.
Malomo was incorporated in June and its staff was put together in September, when actual product work began.
Headquartered in Fountain Square, the company has three full-time employees in addition to the two co-founders, but the long-term plan calls for the company to become much bigger.
“We think there’s a $100 million opportunity here, and we think long-term this will be a company with a couple hundred employees,” Aning told IBJ. “We are intent on building an enduring company.”
Malomo has already caught the attention of some established investors and tech entrepreneurs.
Hyde Park Venture Partners and High Alpha Capital partnered to lead the funding round, with participation from One Click Ventures founders Randy Stocklin and Angie Stocklin, and Formstack founder Ade Olonoh.
Randy Stocklin will join Malomo’s board. Hyde Park partner Tim Kopp and High Alpha partner Eric Tobias are joining as board observers. The funding is considered a "pre-seed" round, a term typically reserved for very early rounds of less than $750,000.
Aning and Smith previously co-founded local digital product agency Sticksnleaves LLC, where they launched more than 100 web and mobile products to market. Before that, the duo started another tech company, Pocket Tales LLC.
Malomo’s software connects with customers’ e-commerce sites and also into the software of its customers’ shipping providers, Aning explained. As a package status changes, businesses can proactively message customers with updated tracking information and include branded communication through Malomo-powered tracking emails and tracking page.
The company is integrated with e-commerce platform Shopify, as well as major U.S. carriers including the U.S. Postal Service, UPS, Federal Express and DHL. Shopify reported that at the end of 2018 there were more than 800,000 live stores on their platform, up from 575,000 in 2017.
Malomo customers already include One Click, Summersalt swimwear, Made In Cookware, Homefield Apparel and Bettie Page Clothing.
Aning, a 2017 IBJ 40 Under 40 honoree, said the company hopes to fill “a gap in the post-purchase space.” There are two companies nationally with a similar offering as Malomo, but Aning said neither focuses on small and mid-sized companies like his firm.
The new funding will help Malomo continue to build out its product, add more integrations and fuel customer acquisition, the two co-founders said.
The idea is to hit consumers with marketing or other brand-bolstering messages while those consumers are checking on the status of a recent order, a time when Aning said a consumer is pre-disposed to being receptive to messaging from that brand.
The idea for Malomo came to Aning and Smith while running Sticksnleaves , when they realized that many companies are missing an opportunity to target customers who made recent purchases with marketing messages.
“Shipment tracking is an overlooked yet highly engaging communication channel for e-commerce brands,” Smith said. “After implementing Malomo’s solution, our clients are seeing incredible results. Email open rates are nine times higher than traditional marketing emails.”
Consumers that buy products from Malomo’s clients are engaging with their shipment tracking assets on average of 3.6 times per shipment, the company said.
“If a brand is shipping 10,000 orders, that’s upwards of 36,000 brand impressions. That’s a lot of impressions most brands aren’t taking advantage of,” Aning said.
Malomo’s customers pay a monthly subscription fee based on how many packages are shipped, Aning said. He declined to disclose revenue figures or projections.
“As more brands enter the market saturating advertising channels, brands need novel ways to build relationships with customers,” Hyde Park’s Kopp said in a statement. “We think Malomo has found a unique and powerful solution for this.”
Prior to joining High Alpha, Tobias founded e-commerce retailers Batteries.com and Technuity, and ecommerce software provider iGoDigital.
“I spent the first 15 years of my career in e-commerce, and this is an issue every retailer in the world has,” Tobias said. “We’re excited to be backing the Malomo team as they take advantage of this massive opportunity.”
Malomo’s co-founders are already thinking about its next round of funding, Aning said, with that likely coming in early 2020.