Getting a subscription service going and keeping it, complete with fulfillment and delivery, is complicated. Brands use technologies that can cause them to end up with double billing and delivery that the customer is then left to manage.
Subscriptions are big business: The direct-to-consumer subscription market is forecasted to reach $478 billion by 2025. Companies like Upscribe and Rebill are tackling subscription management, but Smartrr’s different approach to solving this from a customer experience perspective is likely why it recently grabbed $10 million in Series A funding.
Smartrr CEO Gabriella Tegen Image Credits: Smartrr
The company, founded in 2020 by CEO Gabriella Tegen, enables direct-to-consumer brands, focused on Shopify sellers for now, to offer customizable subscriptions and memberships and then for their customers to have a portal where they can more easily manage their subscriptions. As a payment processor, Smartrr collects a monthly SaaS fee and also takes 1% of revenue on each transaction.
Prior to starting the company, Tegen was working in proptech for Reonomy and wasn’t really planning to transition to e-commerce — that is, until she started having conversations with some business owners and found out that they were trying to identify how to translate e-commerce into what was affecting brick-and-mortar businesses. One hundred and fifty conversations later, she found that 147 had the same problem: subscription billing.
Tegen explained that with Smartrr, brands can create recurring sales on their website, either through wholesale or e-commerce. The company’s “bread and butter” is advanced subscription offerings — think a monthly box, digital subscription or a membership to a clothing store that unlocks a closet of clothing that you can select from, she added.
“Not only are they enabling that on their website, but then Smartrr is powering the white-label experience that happens both during checkout and then more importantly in the post sale,” Tegen told TechCrunch. “That’s where the subscriber or the member can go in and manage their subscription, not only [to] manage the cancel, swap or delay of items, but also receive points for purchasing another order or gifting someone an order, or see what their favorite influencers are buying from that brand and what the brands social media is promoting.”
Brands that switch to Smartrr see a 2.5x increase in subscription revenue in 60 days and a 5x increase in sales over a subscriber’s lifetime, she added.
The new funding round was led by Canvas Ventures with Expa and Nyca participating. The new capital gives the company about $17.3 million in total funding. Tegen said the main use of the proceeds will go toward product development and R&D.
Harrison Lieberfarb, principal at Canvas Ventures, told TechCrunch via email that he met Tegen in 2021 and was interested in its software “that helps businesses sell, understand, or engage with their customers in new and more thoughtful ways.”
“Smartrr is a leader in an emerging ‘post-purchase operating system’ for D2C brands: one integrated software solution that lets brands manage the key moments in the brand and customer relationship,” Lieberfarb added. “When brands with an existing subscription business switch to Smartrr, they see on average a 130% increase in subscribers. For Smartrr, subscriptions are really just the beginning though. Subscriptions are a natural entry point into helping brands think holistically about maximizing their relationship with their customers.”
He likened the investment to ones Canvas had previously made in live demo company Navattic; OfferFit, focused on marketing personalization; and Folloze, a B2B personalized marketing platform, noting that Smartrr was also providing a new way for brands to operate, in this case, create, manage and cross-sell subscriptions.
Meanwhile, current Smartrr customers include Starface, Ouai, Lemme, Neuro and Jolie. In addition to e-commerce, the company has customers like coffee shops that offer subscriptions using and selling coffee online. Over the past year, the company grew to 30 employees, and Tegen said the company saw nearly a 500% increase in year-over-year processed gross merchandise volume.
“The subscription billing engine has more advanced functionality, which doesn’t exist in the marketplace, and layered on top of that is what will be our product roadmap,” Tegen said. “But now it’s even more significant given the market climate and what DTC brands are experiencing with acquisition costs. It’s a real investment in ways that we can help these DTC brands with not only acquiring recurring customers, but also developing ways for them to spend more, and more frequently, interact with the brand and become a real advocate for that brand.”