San Francisco-based startup co-op closed a $5.8M seed round, aiming to scale its platform to help merchants partner together to acquire customers and scale. The company is tackling the largest challenges facing modern brands: customer acquisition and effective distribution.
Co-op is re-imagining commerce and acquisition through collaboration, creating a new channel and merchandising network that enables the best independent merchants to work together to drive sustainable growth outside of Facebook, Amazon, and Google.
The new round of financing, led by Sugar Capital, saw participation from Shopify, Bessemer Venture Partners, Indicator Ventures, RiverPark Ventures, and several other angel investors, including Roth Martin of Rothy’s, Andy Dunn of Bonobos, Nate Checketts of Rhone, Jai Jung Kim of Hydrant, Sandy Cass of Red Swan Ventures, Cory Moelis of GroundUp Ventures, Ben Jabbawy of Privy, among many others.
"We're excited to participate in co-op's seed round as they work to solve a critical challenge for businesses today: discovery. Helping merchants drive sales to each other is not only positive for the community, but for consumers who are increasingly looking to support independent brands," said Bram Sugarman, Director of Corporate Development and Strategic Partnerships at Shopify.
co-op founder Conner Sherline had previously held senior roles at commerce heavyweights, Facebook, Instagram and Affirm. Through these career defining experiences, he began to see the critical pain points merchants were facing and the lack of relevant channels for acquisition, merchandising and distribution.
“I saw what was a dream channel for emerging brands in 2013 become too expensive very quickly. Prices went from sub $2 CPMs in 2012 to routinely above $50 in 2021. Brands are completely dependent on Facebook and Instagram to provide them with new customers. As costs have gone up and more roadblocks have been put into place on targeting, every brand is looking for new ways to drive growth. A new platform and channel needed to emerge that could leverage owned channels and direct customer relationships.”
Realizing the massive opportunity for a full-service partnership platform, Sherline got to work on creating co-op - a community of like-minded brands that grow together. Fundamentally, co-op is a technology company that builds the tools to support those underlying partnerships between merchants.
The company’s first product, the Post Purchase Experience, allows brands, after they've captured a sale, to promote other complementary brands that their customers might like. For doing so, the host brand earns distribution for their own brand across the co-op network. To the customer, it feels like a "products you may also like" experience, but for the independent eCommerce ecosystem.
One year later, co-op has created a full product suite and platform that supports upsells, cross-promotion, audiences, and intelligent insights. Co-op integrates with any online storefront, including those utilizing Shopify, Magento, WooCommerce, Big Commerce, SalesForce Commerce Cloud, WordPress and even custom builds.
The company has its sights set on facilitating any and all partnership opportunities. Through programmatic and 1:1 partner-led growth, co-op is building the new growth channel for shops and the new way to discover what's next for shoppers.
If that wasn’t exciting enough, co-op now serves over 500 of the largest merchants in DTC across a variety of categories, including the likes of Made In Cookware, BlendJet, Haus, Hydrant, Jot, Health-Ade Kombucha, MATE the Label, True Botanicals, Olive & June and many more.
"co-op is one of our best performing acquisition channels in 2021 and we will continue to scale with them." - Josh, Head of Growth, Made In Cookware
co-op has developed its own proprietary platform, ecosystem, and technology in order to enable all of these brand-to-brand interactions. Underpinning all of this, the company is laser focused on building a best-in-class, marketplace-like recommendation engine.
“Efficiency has become so much more critical when it comes to targeting and curating an audience and curating a brand. So, ultimately co-op makes intelligent recommendations for products based on information we have at that moment, becoming a discovery platform for additional things that you might love as a consumer. The experience aims to be relevant and feel good for consumers, helping them cut through the noise that exists in the world of products.”
Certainly there will be advertising elements to the platform as well. Merchants are be able to leverage co-op for acquisition, pay for additional placement across the network, upsell their own products, survey their customers, integrate with email and SMS, and even leverage a flow builder to make sure every customer segment is served the right set of co-op products.
Once integrated on a merchant’s site, co-op claims its merchants typically see click-through-rates of up to 3% and click-to-conversion rates of up to 20%. Some shops are generating >10% of their entire monthly revenue from co-op’s post purchase cross-promotion.
"Co-op has helped increase our brand exposure and new customer acquisition through relevant cross-brand opportunities. We are excited to continue working with them closely!" - Hydrant
With the additional funding, co-op will continue to create a flourishing ecosystem of brands as well as blitz the market with groundbreaking and innovative product launches. The funding will also allow co-op to expand it’s remotely distributed 10-person team to around 25 by year-end, including engineers, product specialists, content and community experts, and customer success and sales.
“We're excited to lead this next round in co-op's journey. It's never been easier to start a new brand, yet with new lowered barriers to entry, it's never been more challenging to scale. With prices rapidly increasing in digital advertising platforms, co-op is providing a real media diversification strategy by unlocking an entirely new channel, powered by partnerships, to grow." - Brian Sugar, Managing Partner at Sugar Capital