We are excited to announce our recent Series A investment in Zephr. Zephr is on a mission to enable companies to tailor their subscription offering to every individual customer. By enabling its customers to make personalized offers, Zephr allows companies to significantly expand their market and increase customer retention. The company is led by James Henderson (CEO), Felix Danczak (COO), and Chris Scott (CTO) from London, UK, and employs 40 people.
The subscription economy has grown by more than 300% from 2012 to 2019, driven by industries that are transitioning away from transactional or lump-sum models to subscription models. To date, most companies are only able to offer ‘one size fits all’ subscriptions that do not match the exact requirements of each customer. This leads to increased churn levels among existing clients and failed conversion of sales prospects.
Zephr has developed a solution for companies to tailor their subscription models to every individual user without the need for coding. Zephr’s technology identifies the digital behavior of the user and processes this through a dynamic paywall. Based on several rules set by the company, a customized subscription plan will be generated for each visitor. So, you don’t pay for what you don’t need, and you can’t use what you don’t pay for. These personalized offers lead to reduced customer acquisition costs, boosted revenues, and increased marketing efficiency. In our view, all these elements are becoming increasingly important in a maturing subscription industry.
Let’s say you want a subscription on the Economist but you are only interested in the tech news and only on Sunday morning. Or you are a sales manager interested in just the reporting section of a CRM-system. To date, these customized product offerings are not yet possible. Zephr however enables these subscription-based companies to tailor their subscriptions and product offerings to every customer.
Companies across all industries have to optimize their yield management to overcome increased competition and customer acquisition costs. Personalization remains the primary differentiator for companies and Zephr is well-positioned to become the leading solution for offering tailor-made subscriptions on a non-coding basis. Our investment thesis was, among others, driven by:
Market Development: over the past years, we have seen personalization in the top and the middle of the funnel. Marketers have all started using tools that enable personalization of the message. Examples are the personalization of ads, A/B testing, CRO and marketing automation. However, personalizing the offer, essentially the bottom of the funnel and the retention layer, has not been solved. Zephr plays in the latter domain. We believe it is an organic next step to integrate Zephr in the marketing and product stack;
SaaS markets are maturing, and acquisition costs are rising due to increased competition. We believe that a tool which enables businesses to optimize revenue, increase conversion and prevent churn through personalization of the offer is a vital infrastructure piece to the subscription economy and will gain importance over the years;
Product Leadership: Zephr has demonstrated product leadership and has developed a user-friendly product that is, in our eyes, better than any alternative in the market;
Go-to-Market: Zephr has a strong replicable go to market approach for several key verticals, such as Media and SaaS;
Team: We believe that the founders of Zephr are uniquely set-up for this product. Previously in their career they have become experts on personalization in different companies across several industries. Moreover, we were impressed by the accomplishments, hunger, thought process and team building capability of James, Felix, Scott and the rest of the team;
A great investment fit. As the media and software industry is an important vertical for Zephr, we can bring in the relevant expertise alongside Bertelsmann Digital Media Investments (BDMI);
We want to congratulate the other co-investors Nauta Capital and BDMI and look forward to supporting James, Scott, Felix and Zephr in their journey!
More information about Zephr can be found on their website: https://www.zephr.com/. Feel free to reach out to email@example.com for additional information, or share experiences about any B2B SaaS market.