Raise your hand if you’ve bought something online? All of you? Of course. Even before the pandemic, e-commerce was continuing to claim a larger share of shopping every year. But then, it accelerated even more. Millions of small businesses needed to get online to stay alive, and for some, capture the moment and prosper. This trend isn’t slowing down, it’s only going to grow. That’s where CACTIVATE comes in. It is the first AI built for SMB store owners.
CACTIVATE leverages AI to arm the 256 million SMBs with a fully-automated website and “smart” digital advertising for a tiny fraction of the cost of an agency. And it is the first to be truly plug-and-play. Digital ad spending is expected to grow to $646B by 2024 yet 62% of SMBs lose money in online marketing and advertising. Without CACTIVATE, obstacles such as high cost of agency help, low sophistication with digital advertising and lack of time remain barriers to success with digital media for SMBs. After completing a 4 question survey, SMBs will have everything they need to create and place digital advertising and greatly increase conversion. ML continues to optimize keywords as they repeat the cycle. Their approach avoids the typical cold start problem, so even new businesses can benefit.
A few key trends are converging to make the “why now?” question easy to answer. First, AI and machine learning tech such as GPT-3 have made this approach feasible, and iOS 14’s opt-in app tracking is destroying digital advertising playbooks, forcing a change in the current model. Additionally, the explosion of new social media battlegrounds like TikTok and Shoppee as well as the opening of marketing APIs, combined with the aforementioned COVID accelerant, provide many new opportunities for SMB to reach their customers.
So — big problem, check. Big market, check. Unique solution, check. How about the team? I first met Wentao Xiao, CEO and cofounder, several years ago when he and his co-founders were working together on a different online shopping startup. He always struck me as the quintessential hustle entrepreneur, he can go and go, bust through walls, and at the same time, has a way that is both charming and humble that makes him great to work with. That startup foundered, but they stayed together, continuing to search for the right problem. It’s a highly talented technical team, both Zhe Lu (CTO) and Peng Wu (Chief Scientist) are experts in software development and machine learning (respectively). Since it’s their second venture together, we know they have the right chemistry to go the distance.
Furthering our interest, they came to TBD with traction metrics that signaled they are on the right path. And of course, their CAC is great.
At TBD, we are fortunate to have many experts and serial entrepreneurs in digital advertising and media. Several of them dove deep into the tech, the approach, customers and the team, and came away impressed. These TBD Angels will continue to provide tons of value long after the SPV closes. And that’s exciting for all of us.
There are 22 TBD Angels invested in CACTIVATE. Other investors included institutions such as EmergingVC and Pasadena Angels. Angels included Roy Liu, the managing director of Hercules Capital, and Richard Chino, an early employee at GoTo.com which sold for $1.6B to Yahoo, and Chief Revenue Officer at Comparison Shopping. Proud shoppers, proud investors, let’s go!