This is why Israeli Yotpo is rising quickly amidst advertising technology’s tough times
Yotpo, one of the fastest rising startups in Israel, announced on Tuesday that it closed a $22 million funding round, its largest to date. The financing, which appears to be either a Series B or C level round, was led by Bessemer Venture Partners and brought its all-time total to $50 million since launching in 2011. The deal places Bessemer Partner Adam Fisher on the board and brings former Salesforce Marketing Cloud point man Jeff DiBartolo on as VP.
“With this funding, we’ll be able to build out our platform to include more features, more integrations and more forms of user-generated content,” Yotpo Co-Founder and CEO Tomer Tagrin said in a press release.
The company, founded by Tomer Tagrin and Omri Cohen, refers to itself as a “user-generated content marketing platform,” though that general title actually doesn’t do their service much justice. Translation? They aggregate reviews and push those in places where you want to market your products.
How do they get 10% of shopping visitors to write reviews?
When asked about how they encourage visitors to write reviews – making the bold claim that they are able to get at least 10% of shoppers to write reviews – Tagrin explained to Geektime that there are two key technologies that help them target users to write reviews. First, “Yotpo developed a technology that enables consumers to write content directly from their mobile device (inside apps or emails),” making it “super easy to use and a 1-step content generation experience.”
Additionally, they “use a lot of big data analysis and predictive analysis to know when and how to engage with a company customers. For example the difference between people buying fashion versus electronic in different locations,” Tagrin noted.
Beginning the path towards acquisitions
In their press statement, Tagrin also announced that the round would help them “begin our global expansion with multiple offices outside the U.S. and Israel” and “explore strategic acquisitions.”
More specifically, Tagrin told Geektime that they have “multiple options mainly to bring awesome teams with technologies around NLP (natural language processing) and different types of implementation of user-generated content. I hope to have some updates soon :).”
A strong league of investors
Marker LLC, Eric Schmidt’s Innovation Endeavors, Vintage Investment Partners, Access Industries and Blumberg Capital and joined the round, plus several unnamed angel investors according to the release.
Bessemer is no stranger to the industry. Their adtech portfolio is large with local marketing startup Yodle and app recommendation engine SweetLabs as two other examples of current investments. They also have several exits: retargeting company Criteo, “social app suite” Involver, and precision advertising company Bizo which was acquired by LinkedIn in 2014.
Yotpo is not alone in the product review and recommendations space. They face challengers like Denmark-based Deemly and Chicago-based PowerReviews. But the money is a big deal in a diverse adtech field that has been on the more serious end of the so-called tech bubble. And that hit goes back as far as the first half of 2015.
“Ad tech has become synonymous with relatively low margin, campaign-driven models, which yields poor exit multiples,” Joe Medved of Softbank Capital told the Wall Street Journal last year. Of course, managing actual ads and recommendations are two different things.
Reviews more relevant in Asia?
The advantage of product and service recommendations is clear in non-Western markets, where word of mouth is what usually enables businesses to grow rather than traditional (much less aggressive) advertising. It underlies the strategy by small brands to use “influencers,” bloggers and social media personalities with strong followings online to review their products. Some industry observers like the Boston Consulting Group recommend an influencer strategy or some form of it in India and China.
That dynamic, though it is culturally different, also plays out also in the West. Aggregating reviews might hold the key to earning trust with new customers in ways traditional advertising cannot.
Laura Rosbrow-Telem contributed reporting.