In 2020, Kathryn Wu launched a side hustle while she was working as a product engineer at Pinterest. Wu started a milk tea company, OhTea, with the hopes of connecting with local grocery stores and gift shops to get them to carry the tea. She quickly realized how difficult it was to not only be able to locate all of the potential retailers but also to find the point of contact at each place. The fragmented market was so hard to navigate, it ended up playing a role in the company’s demise.
“I failed to reach product market fit,” Wu told TechCrunch. “It’s just very hard to find that retail information. I needed to pull from several tools, pull up a big spreadsheet and I thought maybe I should just solve my own pain point.”
That experience was the basis for the startup she co-founded three years later, Openmart. Openmart calls itself the AI alternative to Zoominfo. The company uses AI to scrape data from public business filings, maps, customer reviews and other sources to aggregate a database of local businesses organized by type. Users give Openmart a prompt of what kinds of businesses they are looking to sell to and the startup pulls them a list of potential sales leads with details like each business owners’ name and contact information.
Wu founded the startup alongside Richard He. The pair met while working at Pinterest as interns and later reconnected with each other as part of an Asian entrepreneurship community. The pair bonded over their dogs: Wu has a golden retriever while He has a lab. When He saw that Wu was thinking about starting a company, he wanted in.
While the original idea sparked from Wu being unable to get her small side-hustle business into local business, the resulting mission behind Openmart looked a little different. He said they were doing research into this idea and discovered that large enterprises struggled to navigate selling to local businesses too and decided to focus on building a product for that group first.
“Our core focus is still local business,” He said, regarding the businesses Openmart’s database covers. “We know it is a huge pain point. We are confident this AI agent can generate to all outbound sales as we grow into more sectors, not just physical business. AI in the first wave is not replacing lawyers or doctors, it’s more replacing lower intelligence, lower logical orders of reasoning tasks.”
The company was founded late last year and was a member of Y Combinator’s W24 cohort. Openmart garnered a handful of paying customer trials while in beta that range from Fortune 500 companies to Series B and Series C startups. Their fellow YC founders were some of their first customers. Wu said the plan is to focus on generating these kinds of leads for enterprise clients to start with the intent to develop a tier for medium-sized enterprises down the line.
Openmart just raised a $2.75 million seed round and is exiting beta mode. The startup raised from investors including Y Combinator, Rebel Fund, Afore Capital and several other VC firms. He said the company was careful to set a reasonable fundraising goal and turned down investors pushing them to raise an oversubscribed round. He said the company is following the fundraising advice of its YC group partner, Gustaf Alstromer, to try to maintain 50% ownership through the Series B.
“It’s a pretty simple math problem,” He said. “You want to dilute as little as possible. You only need [to raise] as much capital as you need to survive to the next round. How much money we need is a bottom-up calculation rather than I want as much money as possible.”
He added that with AI helping engineers be more productive they don’t need as much capital for hiring as they can instead concentrate on a small, more efficient engineering team.
Openmart is really focused on aggregating this data on local businesses to start but plans to expand into other areas in the future, He said. While it makes sense for many startups to expand horizontally, or to offer the same service to a different vertical or business category, the company may want to be mindful of which areas they expand to. Some areas like B2B software have pretty established sales lead-generation software players like LinkedIn Sales Navigator and Crunchbase.
He said that even with the company’s plans to expand in the future, they will still focus on their roots: small businesses. Wu added that they want to be thought of as the experts at finding contacts for small and medium-sized businesses.
Source: techcrunch.com