This NYC Startup Just Raised $5M So You Can Access This Segment of Marketing



Granted that ‘snail mail’, as the kids call it, is a slower form of getting things done, every American is still checking and reading all of their mail on a daily basis. On top of that, the fact that it’s physical and requires more action than clicking a button gives it some underrated power in the ad world. PebblePost the front-runners in the direct mail space have developed the software to digitally target to send personalized direct mail in less than a day to further your marketing plan. So on top of all your other marketing plans you can add a new strategy that has proven to improve conversions, response and ROAS (return on advertising spending).

We caught up with PebblePost CEO and Founder Lewis Gersh to speak about the most recent round of funding and learn more about the the direct mail space.

Who were your investors and how much did you raise?

This was a $5 million Series A round led by Greycroft Partners and Tribeca Venture Partners. We also had full participation of existing seed round investors, and added more industry leaders as angel participants.

Tell us about your product or service.

PebblePost invented Programmatic Direct Mail®. We transform real-time online activity into dynamically rendered, personalized direct mail that’s delivered to postal hubs within 12-24 hours, every day. We also provide integrated real-time analytics on response path activity and conversions, enabling continuous optimization based on each day’s results. Our platform consistently generates over 20% response rates, 40% conversion rates and a 15x ROAS.

What inspired you to start the company?

Programmatic was nascent in digital media about 4-5 years ago, and quickly took off at an amazing rate through display, email and video. Everyone knew the progression would include IP TV, digital billboards, digital radio, etc. But everyone missed direct mail. I had built one of the largest venture portfolios of targeting companies; many were pioneers in programmatic marketing technology. I thought it would be amazing if a venture could own an entire channel for programmatic marketing. My partner in PebblePost, Rob Victor, was working on an idea for a venture in direct mail, so we teamed up and figured it out together and launched with complete clarity on where we want to go. This in turn has inspired us in a lot of ways related to what we want this business to accomplish.

How is it different?

The data that flows unceasingly from digital behaviors shows amazing levels of intent by consumers, but digital media does not generate powerful response and conversion rates. Direct mail generates response and conversion rates an order of magnitude higher than digital, but does not take advantage of real time data. So we created an entirely new channel.

Lewis Gersh

Lewis Gersh

We are targeting the $150B+ spent on digital and direct mail marketing and data services.

What’s your business model?

We currently offer our customers a complete, integrated programmatic digital-to-direct mail solution on a cost-per-piece basis.

How has the business evolved since the last round of funding and where do you plan to go moving forward?

We have proven ourselves as the inventors of an entirely new marketing channel, and the market has responded very favorably. We are expanding our team — of investors, advisors and employees – and will be bringing a great number of new products to market over the next 12-18 months.

Our vision and innovation is truly years ahead of anything in market today. There are some great businesses in ancillary markets that focus on enhancing direct mail or workflow automation. We have an extensive utility patent pending on manufacturing a physical piece of collateral using programmatic digital technology. My law degree and Masters in Intellectual Property law has really come in handy. Our patent is an asset we bring to our channel partners and the marketers that invest their trust with us.

What was the funding process like?

We actually didn’t do a process and weren’t out raising money. I founded one of the first seed funds in the country in 2005, Gersh Venture Partners, which I later renamed Metamorphic Ventures and then added a partner, and later a second partner. Some of my co-investors had followed our progress at PebblePost and heard market feedback, so a natural dialog started and this round was the result. To me, the best funding process happens when you aren’t raising money; rather, you have a clear vision and are knocking the cover off the ball on building a venture. We are very fortunate.

What are the biggest challenges that you faced while raising capital?

We were committed to accepting only the capital we needed at this early stage to take us through the next major phase of market development based on the depth of product we have already built. We will be announcing a great deal of it over the next year. We were significantly oversubscribed with Greycroft and Tribeca Venture Partners leading. We had an amazing group of industry leaders from some of the largest digital media companies and agencies in the world join our great group of existing investors and advisors. Keeping a round focused and right-sized was difficult; and we already have some of the largest companies in the space working through pilot relationships that will lead us to much larger investment later this year.

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

My sense is there is another cycle of just too many ventures out there – most are features, not even products, and certainly not companies. We have an unstable geo-political climate. I would advise all venture-backed entrepreneurs to raise more if they can, even a smaller amount, and then focus hard on revenue with the lowest burn possible.

Where do you see the company going now over the near term?

We are establishing deep partnerships with many of the largest companies in the US in digital media, data, printing, logistics and mail volume. We are completing the groundwork to own this entire opportunity on a national and global basis.

About the author: AlleyWatch

AlleyWatch is the destination for startup news; opinions and reviews; investment and product information; events reported, experienced, seen, heard and overheard here in New York. But it’s who we are that makes us different: we’re the writers and the entrepreneurs; the investors and the mentors; the lawyers and the marketers; the realtors and the recruiters – the people who work in the industry.

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