Trade promotion management startup Cresicor raises $5.6M to keep tabs on customer spend
Cresicor, a consumer packaged goods trade management platform startup, raised $5.6 million in seed funding to further develop its tools for more accurate data and analytics.
The company, based remotely, focuses on small to midsize CPG companies, providing them with an automated way to manage their trade promotion, a process co-founder and CEO Alexander Whatley said is done primarily manually using spreadsheets.
Here's what happens in a trade promotion: When a company wants to run a discount on one of their slower-selling items, the company has to spend money to do this - to have displays set up in a store or have that item on a certain shelf. If it works, more people will buy the item at the lower price point. Essentially, a trade promotion is the process of spending money to get more money in the future, Whatley told TechCrunch.
Figuring out all of the trade promotions is a complicated process, Whatley explained. Companies receive data feeds on the promotions from several different places, revenue data from retailers, accounting source data to show how many units were shipped and then maybe data directly from retailers. All of that has to be matched against the promotion.
No API is bringing this data back to brands, so our software helps to automate and track these manual processes so companies can do analytics to see how the promotions are doing," he added. It also helps the finance team understand expenses, including which are valid and those that are not."
What certain companies spend on trade promotions can represent their second-largest cost behind manufacturing, and companies often end up reinvesting between 20% and 30% of their revenue into trade promotions, Whatley said. This is a big market, representing untapped growth, especially with U.S. CPG sales topping $720 billion in 2020.
You can see how messy the whole industry is, which is why we have a bright future and huge TAM," he added. With this new funding, we can target other parts of the P&L like supply chain and salaries. We also provide analytics for their strategy and where they should be spending it - which store, on which supply. By allocating resources the right way, companies typically see a 10% boost in sales as a result."
Whatley started the company in 2017 with his brother, Daniel, Stuart Kennedy and Nikki McNeil while a Harvard undergrad. Since raising the funding back in February, the company has grown 2.5x in revenue, while employee headcount grew 4x over the past 12 months to 20.
Costanoa Ventures led the investment and was joined by Torch Capital and a group of angel investors including Fivestars CTO Matt Doka and Hu's Kitchen CEO Mark Ramadan.
John Cowgill, partner at Costanoa, said though Cresicor raised a seed round, the company was already acquiring brands and capital before releasing a product and grew to almost a Series A company without any outside capital, saying it blew me away."
Cresicor is the perfect example" of a company that Costanoa would get excited about - a vertical software company using data or machine learning to augment a pain point, Cowgill added.
The CPG industry is in the middle of a rapid change where we see all of these emerging, digital native and mission-driven brands rapidly eating share from incumbents," he added. For the next generation of brands to compete, they have to win in trade promotion management. Cresicor's opportunity to go beyond trade is significant. It is just a starting point to build a company that is the core enabler of great brands."
The new funding will be used mainly to hire more talent in the areas of engineering and customer success so the company can hit its next benchmarks, Alexander Whatley said. He also intends to use the funding to acquire new brands and on software development. Cresicor boasts a list of customers including Perfect Snacks, Oatly and Hint Water.
The retail industry is valued at $5.5 trillion, and one-fifth of it is CPG, Whatley said. As a result, he has his eye on going after other verticals within CPG, like electronics and pet food, and then expanding into other areas.
We are also going to work with enterprise companies - we see an opportunity to work with companies like P&G and General Mills, and we also want to build an ecosystem around trade promotion and launch into other profit and loss areas," Whatley said.
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