$10,000 for Privme
Update!: Lakshmi complained about this article and sent me this: "We soft launched in Feb 2016 and we signed up 8 national test merchants (eg. Five Guys, Yogurtland, Quiznos), 150+ Bay Area merchants and have 100,000+ deals in the platform." Thus, I believe they are doing better than I understood from the interview :)
Intro. As a user, I like the idea of Privme, a lot. Listen up, you download an app, connect it with your Facebook, Instagram and whatever it is. Then, you let it screen your bank account (just like QuickBooks does, for example) and you're all set. Now Privme knows a lot about your buying habits. It knows where you're eating, how often you check in, how much you're spending, etc. Then, a restaurant across the street downloads another Privme app and literally says: "I will give 25% to everybody who is eating in this town frequently and is an active Facebook user". The restaurant doesn't want to just give 25% to everybody (like Groupon does), but only to those who are potential active and loyal customers. Impressive, huh? I believe, it's the next step after Groupon.
Product. Privme consists of three pieces, as far as I understood it: a server side, a mobile app for a buyer and a mobile app for a merchant. They all were created by Lakshmi, Pavan, and there small team of developers oversees (I forgot where exactly). Rather complex piece of software and they claimed they invested over $400k+ and over 16 months in building it.
Market. The product is on the market. Lakshmi said that seven restaurants are already on board plus one enterprise (to optimize dining for their employees). What I didn't like is that they've spent so much time on development of the product without testing it on the market first. That's a very typical mistake and it may be critical in their case. Hope they will manage to survive under the pressure of initial market reaction.
Competition. There are many similar solutions, for example Groupon. But they are not doing exactly the same. They don't actually solve the problem of merchants — giving discounts to potentially loyal customers and ignoring the rest. All that Groupon-like solutions are doing more harm to businesses than benefits. However, I'm afraid that something exactly the same as Privme is already somewhere in development or on the market. If that's the case, I hope that Lakshmi will be faster than others.
Team. I only spoke to Lakshmi and he sounded like a down-to-earth practical guy, which is the type I personally like. He's also a programmer himself, with an experience in making products for marketing industry.
Cash. They said that they invested $400k+ up to date. I'm not sure whether the number was exactly that, but definitely a lot of effort was spent to make it. The software product is rather big and works well. However, they haven't had any investments up to date and that's a negative side. We're literally their first seed investor. I can only hope that Lakshmi will focus on raising more seed money immediately. Without money this business idea will be in a big danger. I also promised Lakshmi to introduce him to a number of investors I know.
So, we signed SAFE and I've mailed them a check for $10K. We're partners!
2016-07-29 00:00:00 +0000