Custora Emerges With $6.5M to Help Brands Influence Customers’ Spending

Custora co-founder Corey Pierson

A startup helping Guess, Reebok and other major brands predict and influence their customers’ spending habits emerged Tuesday with $6.5 million in funding and plans to expand.

Although Custora Inc. raised $1 million in seed funding shortly after launching at Y Combinator in 2011, it has kept a low profile since then while the engineering-heavy team improved the product. The 25-person company employs just three in sales.

“We’ve seen time and time again in our industry where you get sales ahead of the product. That can bite you,” Custora co-founder Corey Pierson said. “We wanted to see more results with more brands before we stepped on the gas.”

During the past few years, the New York-based startup has continued to improve its product from the basic one used by Birchbox Inc., Etsy Inc., Fab Inc. and other startups shortly after its . Custora pulls data about customer habits, which are collected both online and at physical points of sale, to create profiles about certain customer types.

When customers arrive at a retailer for the first time, Custora compares their profile, such as what device they are using, the time of day and location, with the profile of other similar customers. Custora will suggest the retailer take certain actions, like sending an email promotion, to the new customer based on what has worked best with similar customers in the past.

Along with doubling staff during the next year, Custora will use the recent infusion to begin building other customer communication methods, such as through social networks and texting, into its automated platform.

The idea isn’t a new one. Custora faces plenty of competition from more-established companies like AgilOne Inc. and startups like Retention Science Inc.

Still, Foundation Capital Partner Anamitra Banerji, who led the recent Series A round, said Custora has gotten an enormous amount of traction despite its small investment in sales in marketing.

Mr. Banerji said he first heard about Custora while doing due diligence on another company he was thinking about backing. Although that deal never came to fruition, he learned enough about Custora from its customers to be impressed and begin tracking the startup more than a year ago.

As Custora continued to improve its dashboard and bake automated triggers, like emails, into the service, he saw larger enterprises begin to flock to the fledgling company. The startup now counts more than 75 customers using the platform, with annual contracts ranging from $30,000 to hundreds of thousands of dollars for larger installations, Mr. Pierson said. Custora analyzes more than 500 million shoppers and has tracked $100 billion in revenue spent both online and in stores, he said.

He declined to disclose Custora’s revenue run rate.

“My biggest challenge is to help them think bigger,” said Mr. Banerji, saying he expects Custora to expand into additional verticals. “Predictive analytics is just emerging and this is beginning of what will be a massive sector.”

Greycroft Partners and Valhalla Partners also participated in the Series A round.

Write to Lizette Chapman at Follow her on Twitter at @lizette_chapman