Record number of unicorns and IPOs: Indian startups raised $39B in 2021

In late March last year, as the virus started to spread across India, investors began to worry about the impact a potential pandemic could have on their portfolio firms.

They exchanged notes, and on April 1, penned a joint open letter to the local startup ecosystem, advising firms to “prepare for the worst.”

In the months that followed, the virus engulfed the South Asian market and, among other things, hit the brakes on funding activity. Scrambling to steer through the unprecedented event, startups began to cut expenses. Some didn’t survive, and a few got acquired in fire sales. Many entrepreneurs and investors stepped up and volunteered to help the nation fight the pandemic, too.

Investors were right about the impact the virus would have on the country, and by extension, on the firms attempting to fuel the economy. But very few were prepared for what was about to happen in just a few quarters.

Scores of startups, many operating in edtech and fintech categories, began to report fast growth. “We started to see three years and five years of growth in one year,” said Ashish Dave, chief executive of Mirae Asset Venture’s India business.

While several investors, including many tier 1 funds that are generally very active in India, were still cautious, a group of investors including Tiger Global, Falcon Edge Capital, and SoftBank shifted into a higher gear.

Navroz Udwadia of Alpha Wave Global (formerly known as Falcon Edge Capital) said in a conference earlier this year that his firm likes to get aggressive when most other funds are cautious about the market conditions.

Tiger Global backed Infra.Market in February this year, propelling the business-to-business e-commerce platform’s valuation from $200 million to over $1 billion in a span of two months.

In a letter to investors in February, Tiger Global said the opportunity it sees in areas such as consumer, enterprise, and financial technology in the U.S., China, and India is “very large relative to the amount of capital we manage and evolving at a rate that is often hard to comprehend.”

Several factors worked in India’s favor, many investors said. There’s an abundance of dry powder in the market and investors are increasingly looking at growth avenues such as emerging regions as their next big bets. It also helped that Beijing enforced a series of crackdowns on its own startups and made it difficult for foreign money to flow into China.

Another thing swinging in favor of India was the record number of IPOs that we saw this year. Food delivery firm Zomato made a stellar debut. Fashion commerce Nykaa, online insurer PolicyBazaar also made strong debuts on the stock exchanges. Paytm filed for the nation’s largest IPO, though the public market is still giving it less valuation than it sought.

Dave said Indian startups going public addressed the exit challenge that many investors have faced over the years.

The investors’ bullishness on India was on full display in April, when the virus was beginning to gain pace again in the country.

Eight Indian startups — including social commerce Meesho, fintech CRED, investment platform Groww, business-to-business messaging platform Gupshup, payments firm Chargebee — joined the unicorn club in April. Tiger minted five of these unicorns.

The sudden flow of cash also created a crunch for talent in the market. Startups began to offer lucrative stock options and salary hikes to employees to win and retain them.

In total, capital flowing to private Indian startups surged over four times to about $39 billion this year and nearly three times from the previous best of $14.6 billion in 2019, according to data from insight platform Tracxn, which has also filed for an IPO.

India now has 81 unicorns, 44 of which joined the club this year. Several of the unicorns and many other fast growing startups have raised multiple rounds this year and increased their valuations multiple times over. Fintech Slice, which is giving millions of Indians access to credit card features and helping them build credit scores, increased its valuation multiple-fold in a recent round it raised from Insight Partners and Tiger Global.

CRED, for instance, has raised three funding rounds and has held talks for a fourth one, TechCrunch reported earlier. Indian edtech giant Byju’s has raised over $1.5 billion since last year. Instant grocery delivery startup Zepto, co-founded by two 19-year-old Stanford dropouts, doubled its valuation to $570 million in a span of two months.

Fintech startup Jar, which is helping hundreds of thousands of Indians start their investment journey, is about to close a round from a high-profile investor, said two people familiar with the matter. The startup, founded this year, is likely to increase its valuation by about 15 times in the new round.

Bangalore-based QuestBook, which is helping developers transition to web3, is about to close a round from a number of investors including entrepreneur Balaji Srinivasan, according to a person familiar with the matter. Polygon is in talks to raise from Sequoia Capital India and Steadview Capital, TechCrunch reported this month. (Also Amazon is in talks to back an agritech startup, per two people familiar with the matter.)

“Startups have become mainstream in India,” said Dave, pointing to a number of recent developments including the arrival of Shark Tank in the country. “Indian parents are no longer hesitant to tell their friends that their kid works at a startup or has founded one. Everyone now knows what a startup is. For years, I had to explain to my dad what I do for a living!”

Tiger Global, which has made over 50 investments in India this year, is currently conducting due diligence to back an additional nine startups in the country, according to a person familiar with the matter. Other than Tiger Global, SoftBank, and Alpha Wave Global have also deployed serious capital in the country this year. SoftBank has invested over $3 billion in India this year. Alpha Wave Global has poured over $2 billion.

The frenetic pace at which some of these firms have written checks to Indian startups this year has also forced many of their global peers to take India more seriously. Temasek, which typically backs late stage startups, has made a record 20 investments in India this year.

Insight Partners, which became more prolific in India this year, made some changes to its investment process in the country to speed up the time it takes to back a startup, two people familiar with the matter said. It’s currently engaging to back Indian NFT platform Faze, according to two people with knowledge of those proceedings.

General Catalyst is building a team in India, too. The firm is also in talks to back a number of startups including OneCode, a person familiar with the matter said. Andreessen Horowitz made its first investment in India this year. B Capital Group has also appointed a new India head.

“Tiger has changed the game,” said Dave. “Every fund on the planet has at some point relooked and reassessed their strategy and tried to figure out what is the best they can do. Not everyone can play Tiger’s game. But what is the next best you can do? Because you can’t play the same game that you used to.”

Sequoia Capital India, which has been investing in India for over a decade, remains the most prolific investor in India and Southeast Asia. It has made over 60 investments this year.

Dave said he expects the pace of investments to continue in the new year. “The market will continue to become more competitive. Just look at the number of people who are beginning to do angel investing.”

“Overseas, the market is huge. The number of investors and firms are also very large. That’s still not the case in India. So the competition for good deals is very high.”

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Not every creator economy startup is built for creators

Ten years ago, if you were a scrappy kid somehow making a living off of YouTube ad revenue and brand deals, you were probably told you didn’t have a real job. Now, if monetizing your creative output is how you pay your rent, you’re part of the creator economy, a buzzy new industry.

An often-cited landmark report from the venture capital firm SignalFire says that creators are the fastest-growing type of small business. Despite the creator economy only really forming a decade ago, there are now 50 million people who consider themselves “creators,” and more American children want to be YouTube stars (29%) than astronauts (11%), per SignalFire. So it makes sense that more and more startups are cropping up to provide tools for creators — it’s an opportunity to cash in on a growing market, and savvy entrepreneurs want to make money.

As this market has expanded, I’ve written about credit card companies for creators, community-building tools and companies that help you design a product to sell, among other ventures. But as my inbox teems with too many creator-focused startup pitches, products and opportunities to ever even consider, I’ve noticed a troubling trend — not all of these businesses are actually good for the creators they intend to serve. Some might actually be pretty predatory.

For example, if an all-in-one creator platform folds, what does that mean for creators who put all their eggs in that basket? How do major tech acquisitions impact the people who monetize on those platforms? As venture capitalists invest in creators as though they’re startups, how can those creators protect themselves from exploitative terms and conditions?

Startups need to have a backup plan to make sure that if they don’t become the next Patreon, the creators who trusted them won’t be doomed.

Startups need to have a backup plan to make sure that if they don’t become the next Patreon, the creators who trusted them won’t be doomed. I’ve started asking these questions to any startup that purports to be a “one-stop shop” or an “all-in-one solution” to the creator economy. Fourthwall had a good answer.

The company said that it has three months of emergency operating expenses set aside to ensure that if they were to fail, they could help transition creators to other platforms. Fourthwall also said it would also make its platform open source if this were to happen. But regardless, this friction isn’t exactly helpful.

The inherent tension within the creator economy lies between the promise of financial freedom and the realization this freedom comes at a cost. As more startups aim to connect talent with brand deals, build monetization tools and develop new social platforms, creators need to know what to look out for to avoid a bad situation — and startups themselves need to think as though they’re in a creator’s shoes, understanding that if a creator trusts them with their business, then they have a moral and financial obligation not to screw it up.

‘A platform is not your friend’

When Spotify bought the popular podcast creation service Anchor in 2019, podcasters panicked. But Amanda McLoughlin, CEO of the independent podcast collective Multitude Productions, had seen massive acquisitions like this happen before. Since the early days of YouTube, McLoughlin has been a creator herself, so she’s seen the industry change from both creative and business perspectives. One defining moment in her early life as an internet creator was when Google bought YouTube in 2006.

“Before 9 a.m., I got a dozen messages from friends and colleagues worried about what such a large and unexpected consolidation means for those of us trying to make a living in podcasting,” McLoughlin wrote at the time. So she rehashed the lessons she learned from the YouTube acquisition: Diversify your income streams, don’t trust individual platforms too much and believe in your own value.

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How Meituan is redefining food delivery in China with drones

On a congested sidewalk next to a busy mall in Shenzhen, a 20-something woman uses a smartphone app to order a milk tea on Meituan, a major food delivery company. In under ten minutes, the pearl-white drink arrives, not on the back of one of the city’s ubiquitous delivery bikes, but descending from the cloudy heavens, in a cardboard box on the back of a drone, into a small roadside kiosk. The only thing the scene is missing is a choir of angels.

Over the past two years, Meituan, one of China’s largest internet companies, has flown 19,000 meals to 8,000 customers across Shenzhen, a city with close to 20 million people. The pilot program is available to just seven neighborhoods, each with a three-kilometer stretch, and only from a select number of merchants. The drones deliver to designated streetside kiosks rather than hover outside people’s windows as envisioned by sci-fi writers. But the trials are proof of concept for Meituan’s ambitions, and the company is now ready to ramp up its aerial delivery ambitions.

Tencent-backed Meituan isn’t the only Chinese tech giant that hopes to fill urban skies with tiny fliers. Alibaba, which runs Meituan’s rival Ele.me, and e-commerce powerhouse JD.com, have also invested in similar drone delivery services in recent years.

On the back of the pilot program, Meituan has applied to operate a commercial drone delivery service across all of Shenzhen, Mao Yinian, head of the company’s drone delivery unit, said at a press event this month. The application, submitted in September, is currently under review by Shenzhen’s aviation authority and is expected to receive approval in 2022, though the actual timeline is subject to government decisions.

“We went from experimenting in the suburbs to a central area. That means our operational capability has reached a new level,” said Chen Tianjian, technical expert at Meituan’s drone business, at the same event.

Meituan's self-developed drone just placed a milk tea order into its delivery station, from which the customer can pick up the drink using its app. Took 4 mins for the drone to arrive from the merchant 3km away. pic.twitter.com/F52lhLeowA

— Rita Liao (@ritacyliao) December 17, 2021

Flying meals

At the moment, Meituan’s delivery drones still involve a good amount of manpower. Take the milk tea order, for example. Once the drink is ready, Meituan’s backend dispatch system assigns a human courier to fetch it from the merchant in the mall to the roof of the complex, where the company has set up drone takeoff pads.

Meituan’s drone launching pads on the roof of a mall in Shenzhen / Photo: TechCrunch

Before takeoff, an inspector checks to see if the box holding the drink is secure. Meituan’s navigation system then calculates the quickest and safest route for the flyer to reach the pickup kiosk and off it goes, the milk tea into the sky.

The economic viability for using drones to deliver food of course is still unproven. Each of Meituan’s small aircraft, which are built with carbon fiber and weigh around 4 kilograms, can carry about 2.5 kilograms of food — roughly the weight of an average two-person meal, according to Chen. If someone orders just one cup of milk tea, the remaining space is wasted. Each kiosk can hold about 28 orders, so at peak hours, Meituan is betting on customers to gather their food promptly.

There’s also the matter of creating waste with the new delivery boxes. Meituan said it has set up recyclable bins next to the kiosks, but customers are also free to keep the containers. It won’t be surprised if some simply chuck them in the trash.

Lessons from the U.S.

From 2017 to 2018, China’s civil aviation authority started “following” the U.S. in light of research done by the Federal Aviation Administration on low-altitude aerial mobility, according to Chen. Not long after, the Chinese regulator began formulating guides and rules for this budding field. Meituan has similarly studied the paths of its American drone counterparts, but it realizes there isn’t a one-size-fits-all solution, as the two countries vary markedly in population density and consumer behavior.

A customer picks up her order from Meituan’s drone landing kiosk in Shenzhen. / Photo: TechCrunch

Most Americans live in suburban sprawl, while in China and many other Asian countries, people are concentrated in urban clusters. As a result, drones in the U.S. are “focused more on endurance,” Chen said. Drones developed by Google and Amazon, for example, tend to be “fixed-winged with vertical landing and takeoff abilities,” while Meituan’s solution falls into the category of a small helicopter, which is more suited for complex urban environments.

Technologies emerging in the U.S. often offer useful clues to similar developments in China. The picture doesn’t look particularly rosy at Amazon Prime Air. The behemoth’s drone delivery business reportedly has been missing deadlines and laying off staff, though the firm said the unit continued to “make great strides.”

Prime Air, Chen argued, “doesn’t seem to have a clear strategy” and “has been vacillating between” neighborhood delivery, which is the focus of Alphabet’s Wing, and long-distance transport, which is UPS’s strong suit. He continued:

If you look at the competition between China and the U.S. in low-altitude aerial logistics, the important thing is to figure out one’s strategic position. Everyone can design a UVA. The question is what kind of UVA and for what customers.

Regulations

When asked about the safety of drone delivery, Chen said Meituan’s solution “strictly follows” the rules laid out by the “civil aviation authority.” The Beijing-headquartered company picked Shenzhen as its testing field not only because it’s home to drone giant DJI and a mature UAV supply chain. The southern metropolis, known for its economic experiments, also has some of the most friendly drone policies in China, the expert said.

Each of Meituan’s drones is registered with Shenzhen’s Unmanned Aircraft Traffic Management Information Service System (UATMISS). During flights, they are required to pin UATMISS with their precise locations every five seconds. More important, Meituan’s navigation system works to ensure the flyers avoid crowds and built-up areas on the ground, even at the cost of making detours.

Milk tea arriving from Meituan’s drone delivery box / Photo: TechCrunch

The drones being piloted are Meituan’s third iteration on the model. They boast a noise level of about 50 decibels heard from a 15-meter distance, which is equivalent to “daytime street level,” according to Chen. The next generation will be even quieter with noise reduced to “nighttime street level.” But the small aircraft can’t be too quiet, as regulators have advised that having an acceptable level of noise “is safer.”

Human help

Meituan doesn’t plan to replace its millions of couriers in China with unmanned flyers outright, though automation would take some load off its overworked delivery platform. Its dispatch algorithms have come under criticism from both the public and the government for allegedly putting business performance business above rider safety. The challenge to recruit workers has already prompted labor-intensive industries to seek out robotic help.

Meituan’s goal is to find a sweet spot for human-robot collaboration. Shenzhen’s road infrastructure is notoriously unfriendly to scooter drivers and cyclists, but aerial travel isn’t restricted by such ground obstructions. Drones can fly over large interchanges and put meals at spots convenient for couriers to fetch and carry to customers’ final destination.

Meituan is already envisaging more automation. For instance, rather than having its staff manually swap depleted drone batteries, it has done R&D on automated battery swap stations. It’s also exploring a conveyor belt-like system that can move items from restaurants to drone takeoff pads nearby. These solutions are still years from large-scale deployment, but the food delivery titan is clearly gliding into an automated future.

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India’s GlobalBees joins unicorn club for its Thrasio-like house of brands

GlobalBees, which raised one of the largest Series A financing rounds in India earlier this year, has entered the unicorn club as the New Delhi-headquartered firm scales its Thrasio-like house of brands.

Premji Invest, the investment firm controlled by Indian tycoon Azim Premji, led the nine-month-old startup’s Series B financing round, the young firm disclosed in a regulatory filing. The round, about $110 million, values GlobalBees at over $1.1 billion, the filing showed.

Steadview Capital, Trifecta Capital (which invested $30 million in debt in the new round) and existing investors SoftBank and FirstCry, also participated in the round.

Founded by Nitin Agarwal, formerly of Edelweiss Financial, and Supam Maheshwari, a founder of FirstCry, GlobalBees acquires and partners with digitally native brands across categories such as beauty, personal care, home and kitchen, food and nutrition, and sports and lifestyle, with a revenue rate of $1 million to $20 million.

GlobalBees helps these firms scale and sell to marketplaces and through other channels in India and outside of the South Asian market.

“We have created and engaged with brands in the past and realized that most of these brands reach a scale after which it becomes too difficult to scale them,” Agarwal told TechCrunch in an interview earlier this year.

“Supam and I have been talking about this for several years, trying to find ways to disrupt this market. We think there’s an opportunity to create a new house of brands that is digital-native.”

At the time, Agarwal said GlobalBees was looking to acquire up to three dozen brands. Indian news and analysis publication the CapTable, which reported about GlobalBees’ talks to raise a round at the unicorn valuation in October, said then that GlobalBees was in different stages of conversations to close deals with at least 15 brands.

Some of the brands GlobalBees has acquired in recent months. (Data: Tracxn)

Scores of startups in India today are trying to replicate what is popularly known as the Thrasio-model. (Though it’s worth noting that Thrasio took about two years to become a unicorn.)

Mensa Brands, a similar venture by former fashion e-commerce Myntra’s chief executive, recently raised a $135 million Series B financing round that valued the startup at over $1 billion. It was six months old at the time of the funding announcement. Titan Capital, which has backed about 200 startups in India, has invested in Powerhouse91. 10club, another similar startup, raised $40 million earlier this year— though much of it was in debt.

Like Thrasio, several of these firms are trying to acquire brands that sell midrange to high-end products in categories where competition is limited. In fact, some of the categories that are common among these brands are so underappreciated that even Amazon and other e-commerce firms have not explored them through their private label ecosystems.

With more than 800 brands, India is quickly becoming a fast-growing market for direct-to-consumer brands.

Many investors believe that the Amazons and Flipkarts of the world have laid the rails for digital commerce, and smarter and more profitable businesses can be built atop them.

“Newer models on social commerce will continue to penetrate deeper into Bharat while revenue based financing models will provide an alternate financing option to equity dilution conscious smaller D2C brands. At the same time, consumers will demand frictionless post-checkout journey (auto filled card/customer details, RTO predicts, one step checkout). Startups providing shovels in the gold rush (Shiprocket, GoKwik) will have the potential to reap big wins,” a recent analysis said.

GlobalBees joins over 40 other India-based startups that have entered the unicorn club this year, up from 11 last year. Several high-profile investors, including SoftBank, Falcon Edge Capital and Tiger Global have doubled down on their investments in the South Asian market in recent quarters.

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Amazon workers at two Chicago warehouses walk out to demand better treatment

This morning, dozens of warehouse workers at two Amazon facilities near Chicago staged a pre-Christmas walkout during the busiest time of the year to demand better treatment and higher wages.

“We have been passed over for raises. We are being overworked, even when there is sufficient people to work here,” a worker at the DLN2 facility in Cicero said on a livestream posted by the Amazonians United‘s Chicago chapter, which is not affiliated with Amazon. “We have not received the bonuses we were promised. There are people here who were hired as permanent workers, and then they took their badges away and made them temporary workers. They are staffing this place unsafely, making people work too fast, even though we don’t have to.”

These workers, who work between 1:20 AM and 11:50 AM, are also demanding a $5 per hour raise. Amazon told TechCrunch that the current starting pay is $15.80 per hour at the two facilities that staged walkouts, DLN2 in Cicero and DIL3 in Gage Park. The Amazonians United speaker also said that the facility used to have twenty minute breaks as a pandemic precaution, but these have been reduced to fifteen minutes. However, the pandemic is not over, especially as the omicron variant spreads — three workers tested positive for COVID yesterday at the Cicero facility, according to the speaker.

Before walking out, the workers presented management with a petition listing their demands, but they said they didn’t receive a response, thus prompting the walkout.

The speaker also claimed that workers were told by management that whoever participates in the walkout “might as well leave their badges,” meaning that they wouldn’t be coming back. It’s illegal to take action against the employees of private companies for staging a walkout. But employees reportedly returned after the strikes to find that their schedules were blank and they had been clocked out for the day, sparking concern about retaliation among walkout participants.

“We respect the rights of employees to protest and recognize their legal right to do so. We are proud to offer employees leading pay, competitive benefits, and the opportunity to grow with our company,” an Amazon spokesperson told TechCrunch in a statement.

The Amazon representative added that no workers are being fired or suspended due to their participation in the walkout. The company said that workers were repeatedly reassured that no retaliation would occur if they protested.

But across the country, Amazon workers have accused the company of trying to quash labor organizing. Last year, Amazonians United co-founder Jonathan Bailey filed a complaint with the National Labor Relations Board (NLRB), stating that the company violated labor laws by retaliating against him for organizing. He said he was detained and interrogated by a manager for 90 minutes after organizing a walkout. The NLRB found merit to these allegations and filed a federal complaint against Amazon. The company settled, and as part of the settlement agreement, was required to remind employees via emails and on physical bulletin boards that they have the right to organize.

Bailey’s complaint to the NLRB was one of 37 against Amazon between February 2020 and March 2021, according to NBC News. But just months after this settlement, Amazon was found to have unlawfully prevented a Staten Island employee from distributing pro-union literature in the break room.

Labor board authorizes new Amazon union vote

Even corporate employees have filed complaints against Amazon with the NLRB. In September, the company settled a complaint from two former Seattle office employees, Maren Costa and Emily Cunningham, who were terminated after advocating for warehouse workers at the onset of the pandemic. The settlement requires Amazon to compensate Costa and Cunningham for lost wages, and once again, notify employees of their right to speak out about issues at Amazon.

But in recent weeks, tensions have even further escalated. On December 10 in Edwardsville, Illinois, six Amazon employees were killed when a tornado destroyed the DLI4 facility. For years, Amazon workers weren’t allowed to carry cell phones on warehouse floors, but the company relaxed this policy during the pandemic. Recently though, Amazon began reinstating the policy. So, when the National Weather Service issued an emergency alert urging people to take shelter, some Amazon employees had no way of knowing that a lethal storm was on its way.

As Amazon workers in facilities across the country seek better compensation and conditions, the e-commerce giant is in the midst of its busiest time of the year.

“We will work hard to make sure that everyone gets their Christmas gifts, everyone gets their packages,” a Chicago warehouse worker told FOX 32 Chicago. “But, you know, we just want to be treated fairly. That’s all.”

Amazon warehouse workers are walking out and Whole Foods workers are striking

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Ocurate raises $3.5M to show customer lifetime value for B2C companies

Ocurate, a startup using artificial intelligence to predict customer lifetime value for e-commerce businesses, took in an oversubscribed seed round of $3.5 million.

Backers in the round include 8-Bit Capital, DCF Capital, Data Community Fund, AIX Ventures, Italmobiliare, Streamlined Ventures and some individual strategic angel investors like Adam Metzger and Mazen Al-Jubeir.

Tobi Konitzer, founder and CEO of Ocurate, founded the company in July to establish lifetime value as an organizing principle for business-to-consumer companies. Konitzer, who was previously co-founder and CEO of PredictWise, told TechCrunch the company’s “secret sauce” is a SaaS deep machine learning framework optimized over Ocurate’s proprietary database and customer data that exceeds 90% accuracy at predicting people’s behavior.

Currently, companies use metrics they evaluated themselves, and often look at cost per click or action and then retention. Konitzer believes lifetime value is a better prediction of how much profit a customer will bring to the company.

Ocurate’s database started with voter rolls and now has collected data from more than 300,000 Americans, he said. It also pulls data in from clients; for example, if you are a Netflix subscriber, the data might include login data, telemetry data and what was purchased in the past.

“Ocurate’s technology allows our clients to take actions on lifetime confidently at all stages of the life cycle, which has a significant impact on our customer’s overall business with a potential increase of gross profit by over 15%,” Konitzer added. “Lifetime value should be the thing that governs everything.”

Though established five months ago, Ocurate is already working with four clients — with dozens in the pipeline — and has brought in over $400,000 in annual recurring revenue since launch.

5 predictions for the future of e-commerce

Two of its customers, Wild Earth and eSalon, say they are already getting good insights. Tamim Mourad, co-founder of eSalon, an e-commerce site for hair color, said that for years the company tried to build its own lifetime value model to be better at prediction, but didn’t have a data science team. With Ocurate, it can now build more accurate predictive models to better target and segment clients, and understand where the company sits historically.

Steve Simitzis, chief technology officer for pet food company Wild Earth, said he is focused on customer retention and reducing churn, but traditional methods of doing this often means chasing after customers, which is both annoying and expensive.

“What I liked about Ocurate is that they focused on giving a good sense of customers who were likely to churn so we could pinpoint our efforts,” he said. “For each customer, they give you two numbers, likely churn and how persuadable they are.”

Meanwhile, the new funding will enable Ocurate to get its product out to the public in 2022, double its team from seven employees to 14 and further invest in integrations, data science and machine learning capabilities.

Next up, the company intends to raise another round in the second quarter of 2022, and Konitzer said Ocurate is on target to have 20 customers by the end of this year.

“At the forefront of making lifetime value actionable, we have to demonstrate that we influence the way it works, but essentially, here is who you should reach out to at different points, and here is how much money to put into this,” Konitzer said. “We are building out a recommendation system.”

Optimizing customer retention will be a priority in 2020

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Amazon seeks India antitrust watchdog’s approval to buy Catamaran stake in Cloudtail-parent firm Prione

Amazon is seeking Indian antitrust watchdog’s approval to buy Catamaran Ventures’ stake in Prione, which operates one of the largest sellers on the e-commerce platform, months after the two firms said they won’t renew their joint venture after May next year.

The announcement comes as a surprise as Catamaran owns 76% stake in Prione. Amazon earlier held 49% stake in the company, but diluted it down to 24% to comply with the local laws that prohibit e-commerce firms from having a direct or indirect ownership in businesses that sell on their marketplaces.

In a joint statement Wednesday, the two firms said they are complying with the applicable laws “including all assets and liabilities” to close the deal and have sought the regulatory approval. Amazon has reached out to the Indian watchdog Competition Commission of India for the approval, a person familiar with the matter said.

Billionaire N.R. Narayana Murthy’s Catamaran and Amazon launched the joint venture in the country in 2014. The joint venture restructured its ownership in 2019 following India’s regulatory changes. In August this year, the two said they were ending the relationship.

Who owns Cloudtail? Was it used to sidestep Indian laws.
media rarely investigated.
What makes us think that the same people are not at it even now?

— IQ wala Anand Lunia (@anandlunia) August 9, 2021

That announcement came after news agency Reuters reported, citing Amazon documents, that the American e-commerce firms had given preferential treatment for years to a small group of sellers including Cloudtail and had used them to bypass Indian laws. The Competition Commission of India, separately, ordered an investigation into Amazon and Flipkart last year for allegedly promoting select sellers (those in which they own a stake) on their e-commerce platforms and using business practices that stifle competition. The two firms made an unsuccessful attempt to dismiss the investigation.

“The businesses of the joint venture shall continue under the leadership of the current management and on receipt of regulatory approvals, the board of Prione and Cloudtail will take steps to complete the transaction in compliance with applicable laws,” the joint statement from Amazon and Catamaran said today.

Cloudtail is one of the largest sellers on Amazon in India. It has enabled over 300,000 sellers and entrepreneurs to go online and provided 4 million merchants with digital payment capabilities, the two firms said earlier this year.

Long-standing laws in India have restricted Amazon and other e-commerce firms from holding inventory or selling items directly to consumers. To bypass this, firms have operated through a maze of joint ventures with local companies that operate as inventory-holding firms.

India got around to fixing this loophole in late 2018 in a move that was widely seen as the biggest blowback to the American firm in the country at the time. Amazon and Walmart-owned Flipkart scrambled to delist hundreds of thousands of items from their stores and made their investments in affiliated firms way more indirect.

In June this year, India proposed even tougher e-commerce rules that, among other things, prohibit Amazon, Flipkart and other e-commerce players from running their in-house / private labels. The new proposal asks e-commerce firms to ensure that none of their related and associated parties are listed on their platforms as sellers for selling to customers directly. (New Delhi has yet to follow up on the new rules.)

Amazon has stakes in a few more third-party sellers, including Appario Retail, which is its joint venture with Patni Group.

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Merry Christmas 2021 and a Happy New Year for 2022

The Christmas 2021 break is almost here and tomorrow is the last shipping date for next day deliveries to arrive in time for Christmas. We’re hoping that you’re getting ready to wind down and enjoy the long 4 day weekend and that goes regardless of whether you celebrate Christmas in either a religious or secular manner or ignore the festivities. The past two years have been a long and for many a tiring time with multiple lockdowns and restrictions on our lifestyles and many in ecommerce have worked harder than ever.

Here at Tamebay we’ll also be taking a break but we’ll be back at our desks on the 4th of January to bring you the latest ecommerce and marketplace news in the New Year. Although we are taking a break from our regular daily news publication, we will still be checking our emails (although less frequently than usual) so if anything critical happens we’ll be sure to let you know.

We’re also looking forward to welcoming you to Tamebay Live in January along with our headline sponsor Amazon and a host of speakers from other marketplaces including eBay, Alibaba, Fruugo, and EnableAll. Plus as you would expect a stellar line up of industry speakers and retailers to share their knowledge and experience to help you grow your business. Mark the 25th, 26th and 27th in your diaries and register now to attend Tamebay Live in the new year and we’ll see you there.

Between now and the New Year, it’s time to take a break and we hope, Covid allowing, you get to spend some quality time with family and friends and recharge the batteries ready for 2022. However, we know that some of you will be busily working between Christmas and the New Year, but hopefully with the weekends and Bank Holidays we genuinely hope that you get to take some time for yourself.

We’re also sadly only too aware of those who are currently suffering with Covid or are being forced to self isolate over the Christmas period. This includes some of our team from the office. Our thoughts are with you and we have our fingers crossed for a speedy recovery.

At this time of year, we’d like to thank you for reading Tamebay and especially to thank all of the readers who have commented on the site, emailed in tips, stories and even those that send in complaints to keep us on our toes. And of course the marketplaces, suppliers and industry experts to assist us with bringing you the latest news and information on a daily basis.

All that remains is for use to wish you a very Merry Christmas 2021 and all the best for the New Year in 2022.

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New year, potential new UK Online Sales Tax

The Government published a Call for Evidence on 21 July 2020, as part of its Review of Business Rates, to gather views from stakeholders on all elements of the business rates system and a number of alternative taxes. This included questions on the scope and potential impacts of an Online Sales Tax. The Government concluded the Review at the Autumn Budget 2021 and announced that it will consult on a UK Online Sales Tax. The consultation will be published in the new year.

Currently it’s a fact that the high street is struggling and has been for a long time due to business rates, whilst ecommerce generally benefits from lower business rates as their warehouses are out of town in lower rated industrial parks. However the high street has been in decline for years and with larger retailers and supermarkets siting themselves in out of town centre retail parks it’s easy to see why. The attraction of free and ample car parking compared with the cost of shopping in town is just one of the multitude of reason people don’t find going to a high street with boarded up shops sprinkled between charity shops, betting shops, coffee shops, travel agents and the like that attractive any more. Cookie cutter shops which are the same in every town and city across the country make high street shopping something for the die hard consumer compared to the option many have taken – clicking a button and seeing the purchase arrive next business day by their friendly neighbourhood courier.

The real concerns of a UK Online Sales Tax is who will it apply to and will there be a threshold below which it’s waived? It would certainly be another barrier to entry to the micro business selling online – forget the financial implications and think about the paperwork as you decide which of your sales was online and which were down the market or took place in your shop. Then, even for the largest of retailers does click and collect count as online or is that to be treated as a simple reservation for an in-store purchase? Any UK Online Sales Tax will be fraught with complications and doubtless in the upcoming consultation will have large retailers lobbying to be treated as special cases. Don’t forget, this comes on top of the much hated Digital Service Tax which has already been passed on to small businesses by some of the largest marketplaces and and they are likely to do the same with any UK Online Sales Tax if they can get away with it. (Special shout out to eBay who absorbed the Digital Sales Tax and, as was intended, didn’t pass it on to eBay sellers!)

The Government will use this consultation to explore the arguments for and against introducing a UK Online Sales Tax. That includes evaluating the economic impacts of such a tax and assessing any potential concerns. If you want to have your views heard, keep a look out for the consultation when it is opened next year.

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Ampla raises $40M Series A for its business of providing credit to commerce brands

Ampla Technologies, a startup which provides financing to small-to-medium sized consumer-facing businesses, announced today it has raised $40 million in a Series A round of funding co-led by VMG Partners and Forerunner Ventures.

Existing backer Core Innovation Capital also put money in the round. In conjunction with the equity investment, Ampla has also secured $250 million in a debt facility so that it can begin financing brands. The capital infusions bring the New York-based startup’s total funding to $50 million in equity and $330 million in debt financing since its 2019 inception.

While there are a number of startups out there funding SMBs and e-commerce businesses, Ampla claims that its differentiator is that it provides businesses with a line of credit that includes “omnichannel” revenue streams in underwriting. The company’s goal is to give founders access to more capital at lower cost, according to Ampla CEO and founder Anthony Santomo. 

Ampla’s flagship product, for example, aims to provide (even pre-revenue) businesses with working capital so they can do things like purchase inventory and spend on marketing. Ampla currently works with SMBs in the consumer brand industry across both e-commerce and retail channels. Its “proprietary” data-driven underwriting tool takes into consideration the two channels, and provides “fully transparent” interest rates with no hidden fees and larger credit limits, according to Santomo. 

“By the full omnichannel view, we mean that we are able to look at not only e-commerce revenue streams but also retail revenue streams to capture the entire commerce view,” he said.

Unlike raising venture money, the working capital is non-dilutive. Indeed, a number of startups providing alternative financing have emerged in recent years, including Clearco and Settle, among others.

Ampla goes a step further, Santomo added, by providing adjacent financial tools designed “to help emerging companies grow more efficiently.”

The startup has over 200 customers including Partake Foods, Bev, Good Planet Foods and Serenity Kids. Nearly 30% of Ampla’s customer base so far is made up of businesses founded by people of color and over 40% by females, its execs claim.

While the company declined to reveal hard revenue figures, it did say that its monthly transaction volume has grown over 300% in the last 12 months. Its headcount has quadrupled to 40 during that same timeframe.

Ampla plans to use its new capital to, naturally, do more hiring across product, technology, sales and operations. 

“Growing our team will allow us to launch new products and iterate on existing products faster,” Santomo told TechCrunch. “All products are driven by customer feedback and demand.”

The COVID-19 pandemic created a shift in e-commerce adoption. When the pandemic hit, “Ampla quickly realized that large increases in e-commerce sales were coming across the majority of its customer base,” Santomo said. “These large increases in e-commerce sales created a universal demand for a commercial-grade working capital solution.”

Why and when startups should look to diverse sources of capital

Jason Bornstein, principal at Forerunner Ventures, led acquisition and demand planning at Bonobos ( an e-commerce-driven apparel subsidiary of Walmart) in its early days that ended up raising over $100 million in funding.

At the time, he recalls, “it was never easier to build a brand online, but it was challenging to build a business online.” 

“But over the last decade, a playbook for how to launch a digital brand has developed. The enablement layer of products and services has matured, and there’s now a vibrant ecosystem of digital brands,” he wrote via email. “When it comes to financing, however, the choices aren’t at all clear-cut. While select brands may continue to take equity and venture debt through the VC ecosystem, most brands do not have access to appropriate capital to scale. Brands deserve a financial platform that appreciates and understands their business model, capital needs, and ambitions.”

While Forerunner became known in the market as an early supporter of digital brands, Bornstein points out that the firm has “always” believed that stores and wholesale will continue to play a meaningful role in a brand’s sales strategy and presence in the market. 

“Ampla shares this belief and uniquely considers omnichannel revenue when underwriting a business,” he said.

Brooke Kiley, partner at VMG Catalyst, noted that VMG has a long history of investing in consumer products and has seen firsthand that there’s a lack of viable working capital options for emerging brands. 

 “The existing alternatives leave entrepreneurs confused and frustrated. With Ampla, what you see is what you get,” she wrote via email. “There are no hidden fees or intentionally confusing structure. Your business is evaluated as a whole – not just one individual revenue channel – and provided with flexible terms that are designed with the customer in mind.”

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Next-day package delivery startup Veho valued at $1B following $125M Series A

Veho, a startup applying technology to next-day package delivery, aims to solve the last mile of delivery — how packages get from fulfillment centers to the customer’s door. It also wants to do it with a unique flair: providing transparency into deliveries that starts with the option of when, where and how customers want their packages delivered and then real-time communication throughout the whole process.

Since raising its seed round in the summer of 2020, New York-based Veho has grown 40 times in revenue, while also increasing its employee count from 15 to 400, Veho co-founder and CEO Itamar Zur told TechCrunch.

It is already working in 14 U.S. markets, but plans to grow to 50 markets by the end of 2022. To do that, and invest in technology development, growing the team and introducing and scaling its doorstep returns program, the company announced $125 million in Series A funding that valued the company at $1 billion.

General Catalyst led the round and was joined by Construct Capital, led by Rachel Holt, Bling Capital, Industry Ventures, Fontinalis Partners and Origin Ventures. The latest funding round gives Veho a total of $130 million raised to date, Zur said.

Walmart announces GoLocal, a last-mile delivery service for other retailers

You might be asking yourself why in the world a young company would take on so much capital up front like that, but Zur responded that Veho is “a substantial platform, not a small operation at this point, and we want to maintain fast growth.”

“We have an opportunity in the midst of the biggest e-commerce revolution, and after growing fast through the pandemic, that is not going away,” he added. “Customer experience is changing in front of our eyes, and other than speed and communication, what brands want to provide is visibility and data. We think it is the perfect time to take in more capital to continue to grow at a phenomenal rate.”

Sure, Amazon has a bear hug on about 50% of the last-mile market, and there is no debate that they are doing well here. Zur doesn’t deny it either, but he does see an opportunity to offer the same kind of delivery service for the 50% of e-commerce businesses that want to offer something faster than seven to 10 business days.

Veho’s technology matches package delivery demand with qualified driver partners and can then let customers know the actual time of day when they will receive their package and even when the driver is headed their way. It is also making it possible to reschedule a delivery in real time, change an address or provide personal delivery instructions.

The Veho team. Image Credits: Veho

The idea for the company stems from Zur’s own experience. While in business school, he bought a subscription for meal delivery, but his first package never arrived. Zur recalls trying to get in touch with the delivery company, and after waiting for 40 minutes, the call was disconnected. As a result, he canceled the subscription, which is not unlike what other consumers do as they become more intolerant of receiving packages late or not at all.

“In an increasingly competitive e-commerce space, there are tons of companies looking for similarly fast delivery as Amazon, but lack the scale to do it,” Zur said. “Veho levels the playing field for these brands. The biggest missed opportunities are connecting the dots between the pre-packaged experience and delivery to help brands build more loyalty and for people to stay with them longer, to buy more and buy more frequently.”

Veho is not alone in trying to solve the last-mile problem, and is among companies around the world also raising capital for their approaches. For example, in the past six months, we saw Zoomo, Cargamos, Coco, Deliverr and Bringg announce new rounds. Walmart also introduced its Walmart GoLocal program in the summer for other retailers to tap into the retail giant’s delivery network.

Zur doesn’t see Veho competing against the likes of Deliverr or some of those others, but does see the company competing with the national shipping companies. He believes their technology was designed for “an older world” that didn’t include e-commerce, and that is what separates Veho from them — that it was built “entirely around the needs of e-commerce customers” with a vision of how that sector will grow over the next decade.

Last-mile logistics platform Cargamos raises $11M seed round to expand same-day delivery

The global last-mile delivery market was valued at around $108 billion in 2020 and is set to grow by $146.96 billion in the next four years, with North America contributing to 39% of that growth, according to technology and research company Technavio.

With purchases shifting to e-commerce, the logistics and parcel delivery sectors are racing to keep up with demands. They’ve also been met with major setbacks in the past few years. From the aptly dubbed “shipaggedon” during the holiday season in 2020, to manufacturing and shipping delays for everything from semiconductors to getting a ship into the port.

Veho wants to make the delivery experience so awesome that it facilitates trust between the consumer and e-commerce company so that consumers return to order again. Zur notes this is already happening, citing that its customers, which range from selling apparel and accessories to food and packaged goods, saw a 20% increase in customer repurchase, 40% increase in customer lifetime value and an eight-point increase in net promoter score compared to customers who received their box from a traditional shipping company.

Meanwhile, Kyle Doherty, managing director at General Catalyst, said there is room for more companies going after an $800 billion e-commerce market, of which half stems from the U.S., and that is forecasted overall to grow around $100 billion each year.

Like Zur, Doherty had his own frustrations receiving packages at his home in San Francisco, which he said is notorious for having problems with package thefts.

“You feel helpless and that you’ve lost control of the situation,” he added. “We have had a front-row seat to the dramatic acceleration in the use of e-commerce and a stressed supply chain. We had a belief that computer technology would enable logistics providers to provide a better experience. When I was introduced to Ita, I got it instantly. He also has empathy for merchants and consumers about the consumer experience, and that stood out on many fronts.”

Last-mile delivery in Latin America is ready to take off

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Indian e-commerce startup Snapdeal files for IPO

Snapdeal filed for an initial public offering on Tuesday, joining a number of firms in India that have tapped the public market this year.

The New Delhi-based startup, which counts SoftBank among its backers, said in its draft prospectus that it will issue fresh shares worth $165 million. Some of its existing investors including SoftBank, Sequoia Capital India and Foxconn plan to sell as many as 30.7 million secondary shares in the IPO.

The 11-year-old firm, which once competed with Amazon and Flipkart in India, has lost considerable market share in recent years and shifted focus to serve consumers in smaller cities and towns.

Snapdeal, which has raised over $1.7 billion to date (according to Crunchbase and Tracxn) says more than 50 million unique customers have shopped at least once on its platform since April 2018. “75%+ of our business comes from repeat customers. More than 70% of our sales are from beyond Tier 2 towns and cities and 99% of our orders come via mobile phones. And we cover 96% of the pin codes in the country. Our users browse and connect with us in seven languages, beyond Hindi and English,” co-founder and chief executive Kunal Bahl (pictured above) wrote in recent LinkedIn post.

“Building Snapdeal 2.0 has meant creating all the required underlying capabilities to serve value-savvy users, staying within the guardrails of good economics and moving fast with bold and decisive steps,” he added.

The shift in focus came after months-long talks to merge the business with Flipkart didn’t materialize in 2017.

In its prospectus today, Snapdeal said it generated an operating revenue of $31.9 million in six months ending in September.

More than half a dozen consumer-focused Indian startups have filed for an IPO this year. While some including Zomato and Nykaa have made stellar debuts, others including Paytm, which filed for the nation’s largest IPO, has consistently performed below its issue share price. Insurance aggregator PolicyBazaar has also lost all its IPO gains.

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Zepto, a 10-minute grocery delivery app in India, raises $100 million

Zepto, a Mumbai-based startup that operates a 10-minute instant grocery delivery service, has more than doubled its valuation to $570 million from $225 million less than two months ago as it expands into newer cities.

Y Combinator’s Continuity Fund led the $100 million Series C round in Zepto, the two said Monday. Glade Brook, Nexus, Breyer Capital, Lachy Groom, Global Founders Capital and Contrary Capital also participated in the round, which brings its to-date raise to $160 million.

The startup, founded by two 19-year-old entrepreneurs who left Stanford last year, came out of stealth mode in November. But long before it began talking about the business, Zepto had captured immense interest from the local startup community as people began voicing their opinion about the business.

Zepto, whose name playfully uses a mathematical term to describe the business, offers a 10-minute grocery delivery service, a category that has become red hot in several parts of the world in recent quarters. Heavily-backed players Swiggy and BlinkIt (formerly known as Grofers) have also entered the instant grocery delivery business in recent months.

But neither of them had opted in for this business until Zepto arrived and aggressively started to win customers. Zepto’s arrival in the scene, too, was serendipitous. Aadit Palicha and Kaivalya Vohra had returned to India for a break shortly before the pandemic engulfed the nation.

The teenagers, who previously collaborated on a number of projects, including a ride-hailing commute app for school kids, suddenly found themselves locked in their houses in Mumbai. As the pandemic raged, the two struggled to get their grocery supplies even as grocery deliveries, categorized as essential by the local government, was still permitted in much of the nation.

“We felt that the online play of the Indian grocery delivery space, which is one of the world’s largest, was grappling with some gross execution errors,” Palicha told TechCrunch in an earlier interview.

In an interview last week, Palicha said the startup is overwhelmed with the support and excitement it is seeing from the customers, but it doesn’t want to “become complacent.”

“We are somewhat overly critical of ourselves and hold ourselves to very high standards. People are happy that they are getting their deliveries in 10 minutes or less, but can we continue to focus on scaling our SKUs and improving our unit economics?” he said. (But at the same time, Zepto is cautious about keeping its employees and delivery partners happy, he said, pointing to the retention and internal feedback.)

Vohra said that its month-on-month buyer retention is 65% and has built a network of micro-warehouses, each of which has a capacity to do over 2,500 orders a day.

At stake is India’s e-grocery market that is estimated to be worth $25 billion by 2025, according to a note from Sanford C. Bernstein. “Online grocery penetration is expected to reach ~3-5%, by 2025 from less than 1% today. Long-term structural drivers remain strong: rising income and affluence, lower tier consumption, e- commerce penetration (~30% CAGR) and a young population (~50% below 25). Grocery spend as a proportion of income remains high at ~ 30%,” its analysts wrote.

Zepto’s dark store. (Image Credits: Zepto)

Zepto today operates in Bangalore, Delhi, Gurgaon, Chennai and Hyderabad, and plans to soon expand to Pune and Kolkata. To ensure instant deliveries, it has set up a maze of over 100 dark stores across these cities that it says are optimized for fast deliveries.

“We are looking at a pretty crazy runrate,” he said. “In the past one and a half months, we have grown our business by 10 times. And now we are working to grow another 10 times by February or March,” said Palicha.

Another thing moving in the right direction for Zepto is the talent it has been able to attract in recent months. Several high-profile executives from Flipkart, Amazon Uber, Dream 11 and Pharmeasy have joined the startup.

Palicha said one of the reasons why so many executives have joined Zepto is that it has enabled many who had moved from Mumbai to Bangalore to come back to their home city. But the startup’s aggressive growth, disciplined execution, and ambitions have made it attractive for people with similar taste, he said. “We have been able to walk the walk,” he said.

“We are excited to double down and lead this round in Zepto (YC W21). Since Aadit and Kaivalya went through Y Combinator, we have observed that they’re exceptional founders who bring relentless focus and “Doordash-like” execution to the quick commerce model,” said Anu Hariharan, a partner at Y Combinator, in a statement.

“They originally launched with a different model, swiftly pivoted to quick commerce in August 2021 and are now adding 100,000 new customers every week, 60% of them women. Their attention to detail on the logistics experience is unparalleled and this has enabled them to scale to most major metros in just 5 months. Simply put, we’re confident Zepto will win in this space over the long-term.”

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Demand Curve: Avoid these 10 copywriting mistakes to get more conversions

Joyce Chou Contributor

Joyce Chou writes growth marketing insights for startups. She is senior content lead at Demand Curve.

Copywriting isn’t just about combining the right words to sell your product — it’s how your messaging connects with users. By improving a few words, your copy can better convince people to become customers.

At Demand Curve, we’ve helped thousands of startups get traction with their first customers and scale their growth. Along the way, we’ve noticed several common conversion mistakes on landing pages, ads, emails and elsewhere that make your copy less persuasive.

For better results, here are 10 common copywriting mistakes to avoid, plus, how to fix them.

Writing in passive voice

Whenever possible, write in the active voice. It emphasizes the subject of a sentence and generally makes your copy shorter and easier to follow.

Consider the difference between these two sentences:

• Resolve all of your urgent issues with our product. (Active)
• All of your urgent issues can be resolved with our product. (Passive)

In marketing copy, active voice is especially important for describing your product benefits. Write them as action statements with your customer as the main character. Framing them in this way, rather than as things or experiences they receive, makes your product benefits easier to visualize.

Here are a few examples:

• Netflix: Watch anywhere. Cancel anytime. (Not “Content can be watched anywhere. Your subscription can be canceled anytime.”)
• Goodreads: Meet your next favorite book. (Not “Your next favorite book is waiting to be discovered.”)
• Mint: Put an end to late fees. (Not “Late fees will end.”)

For more impact, use vivid and descriptive verbs.

Generic wording

Writer and literary critic F. L. Lucas famously suggested “writing to serve people rather than impress them.” Yet many copywriters use generic phrases like “#1 software,” “the best platform,” and so on to impress readers without actually providing helpful information.

As Lucas says, your copy should serve readers. This is best done by adding specificity. Avoid using generic wording, like hyperbolic claims, and instead speak to your readers’ exact needs.

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Here are a few ways to add more specificity to your copy:

Address the objection most relevant to your target persona

Anticipate and then respond to how prospects might push back against your offer. Example: Audible promises “A friendly email reminder before your trial ends” — offering peace of mind to people wary of unexpected subscription charges.

Use the second-person point of view

Relate products directly to your audience. Example: “We’re always talking to couples like you,” the wedding planning company Zola’s about page says. “You two are the heart of everything we do.” This makes Zola’s copy feel more like a personal conversation than if it were to refer more broadly to brides and grooms in the third person.

Incorporate examples

Think of scenarios where your product might be used, or how real customers benefited from your product. Examples help your prospect understand how your product fits into their world — notice how the examples in the last two bullet points provide a detailed point of reference for how to apply our tips.

No defined goal or outcome

Complex products often have a long sales cycle because there’s so much information prospects need to digest. This can result in copy that lacks clear next steps.

Effective copywriting moves people toward action. After all, it’s written for the sake of persuading. If there’s no outcome, it’s not copy; it’s literature.

To avoid this trap, work backward from your desired outcome: What you’d like your audience to do after reading your content. Make each sentence move the prospect closer to taking action.

The HR software company Gusto provides a good example here, using copy like:

“Our plans were built to fit your unique needs. Let’s start with a few quick questions.” — Two CTA buttons appear below this copy. One kickstarts a questionnaire; the other (“Learn More”) directs users to a detailed product page.

“Let’s find the right plan for your business.” — Under this text, users are prompted with a “Talk to sales” button.

“Step 1: Pick a plan that works for your business and budget.” — Gusto links to its pricing page, which includes a comparison table of its products.

Misaligned motivation

We like to think of ourselves as rational creatures, but the reality is we’re not. This is especially apparent in our consumption habits: We often buy with emotion but justify our purchases with logic.

What does this mean for your copywriting? You should build your copy around your prospects’ underlying desires and emotional motivations.

For example, take a look at the headlines used on Wix and Squarespace’s homepages.

Image Credits: Demand Curve

Wix’s headline, “Create a website you’re proud of,” taps into users’ desire for not just a website but a website that looks good.

Image Credits: Demand Curve

By comparison, Squarespace’s headline, “Everything to sell anything,” feels a lot less emotionally aligned with users’ goals. It’s trying to make the point that it offers a full suite of tools to sell any product or service (an example of using logical reasoning to persuade prospects).

But unless they own multiple businesses or sell a wide range of products, a lot of prospects might not actually need all those tools. Their bigger priority is creating an aesthetically pleasing site, which Wix immediately makes a case for with its headline.

Complicated wording and jargon

Readability describes how easy it is for someone to understand a piece of written text. When an article has low readability, it’s hard to understand and vice versa.

Why does this matter? Research shows that the average American best comprehends content written at the seventh-grade reading level — the level of the average 12- or 13-year-old. Text that crosses over into anything higher becomes less understandable.

Your copy should never confuse readers or make them feel dumb. No one wants to spend time trying to read something, after all.

Consider how analytics tool Hotjar communicates what its software does on its product page. It uses phrases like:

• Understand how users really experience your site.
• Visualize user behavior.
• See where users click, move and scroll.

This kind of language is simple and easy to understand. It’s much more effective than phrases like “heatmapping and conversion funnel technology” or “website visualization software” — terms that can be overwhelming to readers new to analytics tools.

So write with the same vocabulary you’d use when talking with a 12-year-old. Use Hemingway App, Grammarly or a similar tool to judge the readability of your copy.

Long sentences

This relates to our earlier point about readability. Compared to long sentences, short ones are easier to understand. They also don’t take a lot of commitment to finish.

The fix here is to present one idea per sentence, and remove redundant words.

Take a look at these examples of short and punchy copy from around the web:

• Morning Brew: Stay informed and entertained, for free.
• HubSpot: Create delightful customer experiences. Have a delightful time doing it.
• Tuft and Needle: See, feel and sleep on the difference.

Not speaking your audience’s language

Good copy communicates information, but great copy leaves a lasting impression. One way to make your copy resonate more with your target audience is to use their vocabulary.

One of the best examples of this is canine-centered subscription service BarkBox. It uses vocab like “zoomies” and “doggos” to speak to its target audience of enthusiastic dog owners.

Image Credits: Demand Curve

Similarly, sports equipment retailer Brooks Running incorporates running lingo into its product copy. It highlights shoes best suited for “overpronation,” “neutral running gaits” and more terms specific to those in the running community, its target audience.

To learn your ideal customer’s vocabulary:

• Check out Facebook groups, subreddits and other communities where your audience hangs out.
• Look at sales calls, customer reviews and service tickets.
• Interview prospects.

Make note of the unique words and phrases commonly used, and then incorporate them into your copy.

Weak headlines

Strong headlines invite people to keep reading. There are two defining traits that separate strong headlines from the weak:

• They pique readers’ curiosity.
• They promise some kind of value.

This applies not just to landing page headlines but also to email subject lines, blog post headers and more.

To write a more eye-catching headline, try one of the following tactics:

• Create a sense of fear or urgency: “10 things you didn’t know could hurt your credit.”
• Simplify a complicated or intimidating topic: “The minimalist’s guide to Bitcoin.”
• Make its value obvious: “The best travel hacks that save you time, space and money.”
• Acknowledge a common objection: “How to speak like a pro even with stage fright.”

No social proof

Readers can spot a sales pitch from a mile away, and they don’t like them. That’s because overt sales pitches often come off as one-sided or pushy. People are also skeptical that they may exaggerate or stretch the truth.

Adding social proof — evidence that other people value your product — prevents people from thinking your copy is pushy or fake. It lets others do the selling for you.

There are several other ways to incorporate social proof into your copy:

• Use snappy lines from customer reviews as headers.
• Mention how many customers you serve.
• Quantify your results or benefits.
• Call out the names of well-known customers that use your product, like influencers or major brands.
• Mention any awards or top rankings your company or product has received.

Here are a few examples:

• Wise: “We move over $7 billion every month and save people and businesses $3 million in hidden fees every day.”
• Mailchimp: “Mailchimp was recently named one of the best global software companies of 2021 by G2.”
• Headspace: “Join millions getting more mindful with Headspace. 4.9-star average rating. 611.9k ratings on iOS and Google Play. 70M downloads across all platforms.”

Emphasizing features

Some copywriters tend to focus on flashy product features, especially when a product involves revolutionary technology. These features are certainly important, but they don’t answer your prospect’s most important question: What’s in it for me?

So rather than emphasizing your product features, focus your copy on the benefit your customers will get.

For instance, Venmo’s website highlights all of the app’s unique benefits:

• “Settle up with Venmo friends for any shared activity, from road trips to picnics to takeout.” — Feature: mobile money transfer with your contacts.
• “Always pay the right person. There are a lot of John Smiths out there. Find the right one fast. No guesswork involved.” Feature: personal QR codes.
• “Add personality to your payment notes with animated stickers, Bitmoji, and custom emojis.” — Feature: social feed.

To frame a feature as a benefit, try applying it to a real-life situation your customer might face. It’s not just about what provides value; it’s about how it provides value.

Recap

Pinpointing these common mistakes in your copy is the first step to improving your conversion rates. The next step is making the changes.

Here’s a quick recap of our recommended fixes:

• Write with active voice.
• Get specific with examples and use a second-person point of view.
• Direct readers toward action.
• Address your prospects’ underlying motivation.
• Choose simple words over complicated ones.
• Shorten your sentences.
• Use your target audience’s vocabulary.
• Write headlines that pique curiosity and promise value.
• Leverage social proof.
• Focus on product benefits rather than features.

Whether it’s your landing page, ad creative, email or something else, applying these fixes will help increase your conversion rates.

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