Hi there,
Welcome to the 77th edition of Heartcore Consumer Insights. Curated with 🖤 every week by the Heartcore Team.
If you missed the past newsletters, you can catch up here. Now, let’s dive in!
Distribution models for consumer startups - Bessemer
Every few years within the consumer ecosystem, new waves of distribution open. Over the past two decades, top internet distribution waves included SEO & SEM arbitrage, email “spam,” and the Facebook newsfeed.
Businesses exploit these emerging distribution channels, and then these avenues of growth become crowded.
The distribution channels that underpinned the rise of today’s Internet giants have dried up. Yet, the pace of innovation and growth in the consumer internet landscape today is remarkable.
New wave of distribution techniques that will inspire a new era of Internet giants:
Virality via social proof: social proof is a well-observed consumer behavior where people mirror the actions of others. This phenomenon is a commonly exploited distribution technique because we want to emulate behavior that we feel is validated by others. Companies like Linktree leverage this. By occupying the “link in bio” real estate on social media pages, Linktree is implicitly endorsed by the user in a public way. The forces of social proof are also evident in any businesses relying on UGC recommendations.
The Etsy Effect: “The Etsy Effect” is a phenomenon that occurs when a seller promotes their own product from a marketplace, and in turn, organically brings in new consumers. This distribution loop, while rare, is powerful as it drives organic distribution within sellers’ networks. One example is Dumpling, which allows any individual to create a grocery delivery business. Another is Chums, a social recommendation platform that encourages users to share product reviews created on the platform with their friends.
Influencers enable disintermediation of the social media superpowers: the top three keyword categories on Google are related to financial services. Savvy fintech startups like Step are working with top TikTok influencers to reach an elusive target audience for fintech products: Gen Z (Charli D’Amelio). New platforms are emerging to enable influencers to monetize their followings, and so we’re observing the rise of B2C2C (business to creator to consumer) platforms in the influencer space.
New platforms: Every couple of years, a new social platform reaches scale and aggregates consumer eyeballs, becoming a new platform in and of itself. Over the past five to 10 years, we’ve witnessed this with Snap, TikTok, Discord, Roblox, and now potentially Clubhouse. These are all opportunities for startups to innovate on customer acquisition. The less mature a platform, the more opportunity for low-cost distribution hacks.
Niche markets unlock massive markets: Weee! is an online ethnic grocer that has quickly grown into a multi-billion-dollar business. The company got its start serving Asian American consumers underserved by local grocers. Most dismissed this as niche, but this drove organic growth, efficient distribution, and a 10x better experience. By building for niche, often underserved communities, startups can create world-class experiences that “wow” a specific vertical and spurs liquidity and organic growth (word of mouth is free!).
Turning networks into economies - Chris Dixon (a16z Crypto)
We spent the last 20 years building networks on the internet. Instagram, Twitter, YouTube, and Discord are all networks.
These platforms gave many people an audience. But due to fundamental structural misalignments between the networks and the companies that own them, we’ve seen increasing tension around these networks’ rules and economics.
For example, social media companies that control large networks routinely kill off promising 3rd-party developers, fight cross-network interoperability, charge excessively high take rates, and adopt intrusive advertising models.
This is not due to bad people or motives. It’s the logic of the model.
We are now entering a new era of the internet - Web 3 - where we have the chance to upgrade these networks into economies.
When Web 2 networks allow for commerce, it is very limited, with centrally prescribed prices, products, and buyer-seller relationships. Because of user lock-in, Web 2 take rates are extremely high.
What might new economies built on top of existing networks look like? We can get a glimpse of the future by looking at emerging NFT communities. For example, the CryptoPunks economy flows across Discord, Twitter, OpenSea, Larva Labs, etc.
Now take this and apply it to, say, a band who has spent years building a following but today gets only pennies from streaming services. Using tokens and NFTs, the band can upgrade its networks into an economy.
The goods that flow through the band’s economy might be social tokens, digital art, collectibles, tickets, game objects, exclusive experiences, or whatever else creators and technologists dream up.
The internet started out with so much promise, but over the last decade got taken over by a handful of giants, but we now have different tools, and the seeds have been planted.
Product work Beyond Product-Market Fit
How to expand to new markets with influencer marketing
Retention analytics tips
Brand Resilience in a changing world
Cameo’s early days story
Marketplaces’ most interesting growth loops
How to avoid a bad customer journey
China Internet Report 2021
What today’s social apps can learn from Web 2.0
23 habit-making insights for product-minded founders
🇪🇺 Notable European early-stage Consumer rounds :
Colizey, a France-based online marketplace dedicated to sporting goods, raises €8M with Cathay/Aglaé/Cassius - link
Lightyear, a UK-based start-up that offers stock trading alongside multi-currency banking accounts, raises $10M with Mosaic - link
Housfy, a Spain-based platform that provides consumers with fee-free assistance in selling, buying, renting, and obtaining mortgages, raises €10M with Seaya/Torch/DN - link
Formo, a Germany-based cellular agriculture company developing cultivated dairy products, raises €42M with EQT/Elevat3/Lowercarbon - link
🇺🇸 Notable US early-stage Consumer rounds :
Curastory, an N.Y.C-based start-up helping athletes monetize their social videos, raises $2.1M with Lightspeed/Techstars - link
9am.health, a San Diego-based virtual diabetes clinic, raises $3.7M with Founders Fund/Define/Speedinvest - link
Sequin, an SF-based debit card startup allowing women to build builds credit score, raises $5.7M with Matrix/YC - link
Juno, an S.F-based startup that aims to build more affordable apartment buildings, raises $20M with Comcast/Khosla/RET - link
Merit, an L.A-based luxury beauty brand start-up, raises $20M with L Catterton/Sonoma/Marcy - link
Elodie Games, an LA-based gaming studio dedicated to building better cross-play games, raises $32.5M with Galaxy/a16z - link
Sleeper, a San-Mateo based fantasy sports app, raises $40M with a16z - link
Numan, a UK-based men’s health platform, raises $40M with White Star/Novator/Vostok - link
🔭 Notable later stage Consumer rounds :
CookUnity, an N.Y.C-based meal delivery startup, raises $47M with Insight /Endeavor/IDCV - link
Recur, a Miami-based NFT marketplace, raises $50M with Point72 - link
Flo, a UK-based period-tracking app focused on fertility, raises $50M with Target/VNV – link
Grailed, a fashion peer-to-peer marketplace, raises $60M with Goat/Artémis/Index - link
1047 Games, a Sacramento-based video game studio, raises $100M with Lightspeed/Insight/Anthos - link
Tia, an N.Y.C-based women's healthcare provider that combines in-person and virtual care, raises $100M with Lone Pine/Threshold/Define - link
Orchard, an N.Y.C-based home buying and selling company, raises $100M with Accomplice/FirstMark/Revolution - link
Grubmarket, an S.F-based online local fresh food grocery player, raises $120M with Walleye/Pegasus/INP - link
Pacaso, an L.A-based real estate platform that helps people buy and co-own a second home, raises $125M with SoftBank/Fifth Wall - link
Whatnot, an SF-based live-stream shopping platform for collectibles, raises $150M with a16z/YC/CapitalG - link
Ribbon, an N.Y.C-based homeownership platform, raises $150M with Greenspring/Greylock/Bain/NFX- link
Scalapay, an Italy-based BNPL company, raises $155M with Tiger - link
Discord, an SF-based video and text app for communities, raises $500M with Dragoneer/Baillie Gifford/Coatue/Fidelity - link
VaroBank, an S.F-based banking startup, raises $510M with Lone Pine/Declaration/Eldridge/Berkshire/BlackRock - link
Sorare, a Paris-based fantasy NFT platform, raises $680M with SoftBank/Atomico/Bessemer/D1 - link
Picnic, a Netherlands-based online supermarket, raises €600M with the Bill & Melinda Gates Foundation Trust - link
🍭 Notable Consumer Exits
Glovo acquires Lola Market and Mercadao. Lola Market and Mercadao are grocery delivery players, respectively in Spain and Portugal - link
Chronext to go public via IPO. Chronext is a Germany-based platform for luxury watch trading where clients can buy & sell luxury watches - link
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Heartcore Consumer Insights is a weekly newsletter covering notable consumer rounds and exits and top content in the B2C space.
