San Diego Sendlane, an email marketing startup says it will close a $5 million to $6 million Series A funding round within the next 60 days.
Co–founders: CEO Jimmy Kim and co-founder and Chief Technology Officer Zakariah Meftah
Revenue: $3 million annually recurring revenue
Number of local employees: 33
Headquarters: Scripps Ranch
Company description: Fast growing email marketing subscription-as-a-service company that specializes in personalized messaging based on user data and behavior
The Scripps Ranch-based company is growing rapidly, with expected growth at 300 percent to 400 percent this year, the company says. The email marketing firm says it is currently bringing in $3 million in annual recurring revenue and has been completely self-financed since it started in 2013.
Co-founder and CEO Jimmy Kim took out a $200,000 loan to start the business, but the idea to make a more personalized email marketing platform was not the model with which the company began. Kim said the Sendlane platform was a solution built based on necessity for multiple e-learning companies, a software company and an e-commerce company that he ran. He ultimately gave up those businesses to focus on Sendlane full time.
“We never started this business to be a business. We created the platform to be used within our own email platform at one of my other business. We used this to solve a problem within our own company, and then we got requests from clients and customers when they saw what we used and they were interested,” Kim said.
The revenue numbers that Sendlane is pulling before a Series A is particularly unusual in the startup space. The company has never spent any money on marketing itself and has grown completely through word of mouth. The founder affirms that the company is completely bootstrapped, and now that it can show significant revenue numbers when approaching VC firms, it will have significant leverage in whom the company ultimately picks to work with.
“We are not taking the typical process; that is not the path we chose. Typically, a company would raise a Series A before they get to this level. We are not raising larger Series A than if we would have done it early. The proof of concept and market share has been affirmed before talking funding and it will accelerate our growth,” said Kim.
Sales and Marketing
“We are not the type of company that requires multiple rounds of funding, we are a group of scrappy entrepreneurs that do what we need to do to make it happen. We now have a lot of options available so that we can pick the right partner to grow at the speed we want to continue to grow at,” Kim said.
Kim said the company plans to use the funding to “put the pedal to the metal” and spend on sales and marketing, adding “that’s the only thing we need.”
Constant Contact and MailChimp tend to get all the attention when it comes to email marketing, but Kim says there is a need for a platform that is more personalized to the consumer based on his or her behavior, something that the big guys fail to deliver.
“We realized that email marketing is more than just newsletters and coupons. Sendlane empowers B2C businesses to personalize their email marketing based on the exact behavior of their website visitors and customers — what pages the customer visited, to their purchasing behavior, their devices, locations, and more. This allows you to micro-segment your data to create highly targeted emails that are designed to maximize a business’ ROI,” Kim said.
Personalization Is a Must
The importance of personalization in email marketing cannot be overstated. Kim says that compared to traditional email marketing, using behavior based automations increases user engagement by 70.5 percent.
Heather Honea, head of the marketing department at San Diego State University, says personalized and contextual emails are essential for marketing purposes and not simply a benefit at this point.
“It has to have that form to even be viable in anyway,” she said.
Relationship Management Tool
“It has historically never been a lead generation tool; it is better as a relationship management tool. We don’t open emails from firms or brands we don’t recognize, but if we do have an ongoing relationship and there is important information, we are much more likely to be highly engaged.”
There is no shortage of big name players in the evolution of email marketing, showing how relevant the industry continues to be. Multiple multi-billion dollar firms are involved in the space, including Salesforce, Hubspot and Constant Contact.
In spite of all the new tools and technology at our fingertips, Kim says that email is still the most preferred way consumers want to make a purchase. Even millennials are still keen on email. A 2016 study from Adestra, an email marketing platform, said that nearly 68 percent of teens and 73 percent of millennials say they prefer to receive communication from a business via email.
In-House Customer Service
Sendlane prides itself on its customer service, which the company says it does not outsource, and is available 24 hours a day, 365 days a year, in San Diego with an average response time of three minutes.
“We’ve been thrilled with their services. Through their email marketing platform, we can communicate important information rapidly to our entire user base, which is extremely important as we are scaling rapidly.
Sendlane has been paramount in helping us reach a recent milestone of $1,000,000+ paid out in cash prizes and student loan payoffs,” said Seth Beard, chief marketing officer of Givling, a Jackson, Wyoming-based student loan crowdfunding app and Sendlane client.