Photo courtesy of Paneau.
Co-founders Alec Fong (left) and Nader Khalil (right) stand with  a new restaurant customer at Saiwalks in San Francisco.

Photo courtesy of Paneau. Co-founders Alec Fong (left) and Nader Khalil (right) stand with a new restaurant customer at Saiwalks in San Francisco.

Paneau, a local startup that partners with Uber and Lyft drivers to offer advertising for local businesses, is pivoting as ridesharing dwindles and is building a gift card platform for small and medium businesses.

Accepted in Y Combinator

Founded in 2018, Paneau has big shoes to fill after recently being accepted in Y Combinator, a top-performing accelerator. Receiving $150,000 from participating in the winter batch program, the startup is now fundraising a multi-million seed round to provide a longer runaway. 

Some notable companies who also graduated from the accelerator in previous years include AirBnB, Stripe, Reddit, Twitch, DoorDash, DropBox, among others, all companies are currently valued at $150 million or more, according to TechCrunch. 

Most of the companies are at least four or five years old, which makes sense — it is very rare for companies to hit massive, record-breaking valuations right out of the gate. Paneau aims to be one of the accelerator’s success stories within the next few years. 

Now headquartered in San Diego, co-founder and CEO Nader Khalil worked as a software engineer at HR software giant Workday in San Francisco while simultaneously building his out-of-home advertising venture on the side. 

“I always told myself there were three eight hour shifts in a day; one of them was sleep, another was working, and the other for hacking away on things. That’s what turned into Paneau,” Khalil said.

Helping Local Businesses

Paneau aims to solve a big problem for local businesses, and that’s to help them reach potential customers in a measurable way. The company launched its offering in 2019, and before entering YC the startup had roughly 40 businesses using its platform ranging from restaurants, fitness, beauty and other niche localities.

The company said it plans to tap into two huge markets, the $11 billion billboard market and the $300 billion digital advertising market.

In addition, recent data showed ridesharing is a growth industry, showing driver license ownership down 16 percent and public transit down by 3 percent, according to the company.

Initially, Paneau partnered with individual Uber and Lyft drivers, they would equip participating rideshare vehicles with tablets that display advertisements for local businesses to riders as the vehicles drive by the businesses.

“San Diego is such an incredible city because we have amazing local businesses here. On the other hand, San Francisco feels like a very different city as it has a very different culinary scene, different coffee shops, etc. We wanted to build a platform that really highlighted that,” Khalil said. 

Platform Advertisements

In particular, the advertisements on the platform include exclusive offers from the businesses. 

For example, a local restaurant could offer a free glass of wine at dinner on the Paneau tablet and reroute them to the restaurant to take action on the offer. Paneau also patented its advertisement re-routing innovation. 

On a competitive note, their solution makes it easier to track success than traditional ad methods, which lacks the ability to tell how many new customers it generates. 

In the advertising space, they were growing in terms of revenue by 65 percent month-over-month over the last four months. However, due to the COVID-19 outbreak, many local businesses cut their advertising budgets and rideshare leaders Ubers and Lyfts also witnessed a significant decrease in users traveling as stay-at-home orders started to take place. 

Paneau which depends on both economies quickly found a silver lining after experiencing a setback in their core business model. 

Discovering that over 10,000 businesses in San Francisco alone, didn’t have any gift card setup. The four-person engineering team dedicatedly worked over the course of 10 days to create an online gift card processing platform. 

“Your favorite bar or taqueria probably haven’t sold gift cards before. It just wasn’t part of their business, so we created an entirely digital gift card platform. The payments all happen online and we immediately put the funds in the business owner’s account.”

Customer Convenience

Designed for customer convenience, it integrates digital gift cards purchased on the platform directly to the Apple Wallet on the buyer’s smartphone. Made easy to use by business owners, they can track the number of cards sold and the total revenue generated.

Paying it forward, the startup is waiving all transaction fees and any local businesses can use their platform free of charge. Once the pandemic passes, they will transfer the cost of the transaction to the gift card purchaser, not the business owner. The company plans to maintain this offer until they reach over $250,000 in transactions. 

In total, the company is servicing San Francisco, and San Diego and two states — North Carolina and South Carolina. Monitoring the COVID-19 pandemic closely, the Paneau team is waiting for when it can reactivate its fleet of 400 Uber and Lyft drivers. 

“The benefit of a startup and the reason startups are typically able to take on large incumbents, is because they are so nimble and they can move quickly.” Khalil said, “It’s definitely a tougher time during COVID-19, but there is also more need and more opportunity to help. Today there are new problems and they need new solutions.”