Toronto-based retail software startup Adeptmind, which leverages artificial intelligence (AI) to improve online search for retailers, has secured around $7.5 million CAD ($6.2 million USD) in Series A financing to accelerate its go-to-market strategy and “double down” on its research and development (R&D) efforts.
The equity funding round was led by Boston’s Innospark Ventures, and also involved support from London’s A/O PropTech and Pi Labs, and Illinois-based beauty retailer client Ulta Beauty.
“Our ability to mine customer intent data is what’s so valuable.”
-G Wu, co-founder and CEO of Adeptmind
COVID-19 accelerated the need for e-commerce and brick-and-mortar retailers alike to focus on digitization. Fresh funding in hand, Adeptmind views itself as positioned to play an important role in the future of retail by bridging the gap between physical and digital commerce through the improvement of online product discovery.
“How can we bring an offline, human-life search experience that you had before, online?” said G Wu, Adeptmind’s co-founder and CEO, in an interview. “Because of COVID, people were forced to be crafty about experiences such as these.”
Adeptmind was founded by Wu and CTO Jing He in 2016, and first launched in 2017. Wu and He were part of the team behind Montréal-based AI startup Maluuba, which was acquired by Microsoft in 2017. According to Wu, Maluuba is “where a lot of [Adeptmind’s] genetics come from.”
The startup has developed a human and AI-powered software solution that aims to zero in on what customers are actually trying to search for online. Ademptmind’s tech analyzes and derives topics (or keywords) from sources that include customer reviews and articles about particular products.
Adeptmind plans to use the fresh capital to reach new customers and develop new online tools based on customer intent analysis, as it looks to drive innovation for what it describes as ”the underserved” physical shopping experience.
The company aims to leverage this financing to serve more retailers and shopping centres in North America and across the world, including in Asia, the Middle East, and South America.
The Toronto retail tech startup’s previous funding includes approximately $5.4 million CAD ($4.5 million USD) in seed financing from Fidelity Investments in early 2017.
Today, Adeptmind serves more than 400 retailers, shopping centres, and small to medium-sized businesses in North America and Europe. The company focuses, in particular, on two types of customers: large retailers and physical shopping centres. Its current clients include Bayer Properties, Cadillac Fairview, Centennial REIT, Decathlon, Hammerson, US Polo Association, and Ulta Beauty.
According to Adeptmind, the startup’s human-machine hybrid model “allows for very high accuracy and quick data bootstrapping.” The firm claims its architecture makes Adeptmind “one of the first companies to deploy deep active learning in a consumer-facing use case.”
Wu said the Toronto startup’s approach is all about trying to determine customer intent to improve their online search and product discovery experience.
“Our ability to mine customer intent data is what’s so valuable,” said Wu.
The startup’s investors agree. “In our AI-driven world, the power of digital search is built on context and access to data,” said Howard Bornstein, principal at Innospark Ventures. “Adeptmind is able to provide deep, rich, customer insights that are helping to shape the way people shop.”
“We spent a long time [over] the past few years gathering catalogues of over 6,000 brands and retailers, and because of this, we are allowing shopping centers to digitize,” said Wu.
The CEO said COVID-19 exacerbated retailers’ need to digitize. Pre-pandemic, said Wu, more than half of purchases began with an online search. Post-COVID, Wu anticipates that the importance of the relationship between online and in-person shopping will increase for retailers.
Wu argued that what differentiates Adeptmind from others in the retail tech market is its view of digitization and physical retail as complimentary. The CEO claimed investors were attracted to the startup because it serves e-commerce sellers and brick-and-mortar retailers alike.
“The timing was right for us [to raise capital] because we’re getting a lot of traction from the market,” said Wu. “Before this, we were actually cash-flow positive, but it got to a point where we couldn’t actually serve new customers anymore. We raised this money so we can serve new customers in the market.”
Adeptmind currently employs 30 people, and plans to add about 10 more by the end of the year. Wu said the funding gives the startup about three years of runway if Adeptmind doubles the size of its team.
According to Wu, there are “a lot of new ways” to do digital product discovery, and the startup hopes to explore them. “What Adeptmind wants to do is to get a critical mass of two or three key big brand retailers to actually [explore] some of these new paradigms, like AI-guided reviews, or guided discovery,” said the CEO.
Wu said this would allow Adeptmind to demonstrate that digital product discovery can be more than just a search bar and a four-by-six grid of products with filters on the left.