Even as the martech space continues to consolidate, new players keep turning up, and things are getting crowded.
The 2017 Luma Marketing Technology Landscape featured more than 5,300 vendors, an increase of 39% from the prior year. As Erika Frank of March Communications explains, the growing number of martech firms have had two main effects. “1. It is becoming increasingly difficult for martech companies to differentiate themselves in such a saturated market; and 2. Brands are overwhelmed with choices and decisions on what technology to actually use.”
Against this increasingly noisy landscape, a few resourceful innovators are catering to one particularly explosive industry in order to stand out, capture market share, and secure the funding they need to scale.
With recreational and medical legalization picking up steam around the world, the cannabis market is rapidly growing in value. European investment bank Bryan, Garnier & Co. predicts medical and recreational cannabis will constitute a combined $140 billion by 2027. It’s an opportunity that’s caught the eye of venture capitalists working in multiple verticals, creating an opportunity for ambitious martech entrepreneurs. Their hope is that by designing solutions from the ground up to cater to the needs of cannabis retailers and loyalty marketers, they’ll be able to secure the financing needed to scale even as the overall martech landscape approaches saturation. Here are a few of the firms that have managed to pull it off, and how.
BDS Analytics closed a $3.5 million series B funding round in May of 2018, bringing its total amount raised to $5 million. Its data-driven solutions and market insights have earned the Colorado company support from Canopy Ventures, a venture firm specializing in cannabis supply chain businesses. Its flagship products dovetail to deliver retailers the intelligence needed to realize greater revenue opportunities. As its website explains, “Using the GreenEdge sales tracking software, BDS Analytics is able to generate actionable insights pulled from dispensary point-of-sale system and closely study the behaviors and psychographics of cannabis users through its Consumer Insights Group.” While not dissimilar to other analytics products, BDS’s singular focus on its target customer proved to be enough to secure the capital needed to stake out its claim in the growing cannabis market. But data startups aren’t the only ones looking to capitalize on the opportunity.
Springbig describes itself as a marketing engine built by dispensaries for dispensaries, which seems to be resonating with VC firms. The loyalty platform recently closed $3.2 million in funding from Green Acre Capital, HALLEY Venture Partners, and members of The Arcview Group, bringing its total funding to $6.3 million. Its product operates entirely through SMS and email channels, delivering in-store promotional details that the company claims can increase customer visits by as much as 25%. While not a novel approach, Springbig’s narrow focus has allowed it to gain the traction needed to scale, adding its voice to the growing cannabis-facing martech landscape. While certainly impressive, others are employing comparable strategies to attract even larger investments.
Baker, a marketing automation platform for marijuana dispensaries and brands, recently announced $8 million in series A funding, for a total lifetime raise of $11.75 million. Unlike other martech platforms, Baker has been able to capture considerable market share by making affordances for the fact that most dispensaries don’t support electronic payment methods. “Thousands of people walk into our business every month, but this being a cash-only business, we had no way to bring them back,” explains one business owner. Baker’s on-site check in system allows customers to participate in loyalty promotions, earning points towards discounted purchases without needing to keep digital payment details on file. “Now we know who our customers are and what they like so it’s fairly easy to keep them coming back.” With over 1,000 dispensaries now using its platform, Baker’s unique approach has convinced six separate VC firms — including Phyto Partners, Base Ventures, and XG Ventures — that it’s worth investing in.
The capital these startups have secured should serve to reinforce the importance of a customer-centric marketing strategy for marketers of all verticals. Using largely incumbent technologies, these young companies have built foundations for themselves that can be used later on to penetrate deeper into the overall martech landscape. No less impressive is the fact that they were able to do so at a time when experts considered the market to be near capacity. Whether these investments pan out remains to be seen, but the shrewd strategies that secured them can’t be denied.