Bounce Exchange, the leader in cloud-based behavioral marketing software and analytics, has been recognized as the No. 1 fastest-growing software company in the U.S., and the 7th fastest-growing company across all categories in the Inc. 5000! As investors, Bounce Exchange presented an incredibly exciting opportunity for us; it’s a rare convergence of our two areas of focus – ecommerce and SaaS – and the company represents the best of both worlds. It’s both a highly effective SaaS platform (and checks off all the boxes we look for when investing in SaaS opportunities), and a proven engine of ecommerce enablement that has won a loyal following among global enterprise clients the likes of Lufthansa, Sears, Uniqlo, Hearst Properties and Comcast.
From a purely ecommerce perspective, BounceX has found an incredible opportunity to solve a critical pain point. The company was founded in 2012 by some of the leading digital marketers in NYC - Ryan Urban, Andreas Spartalis and Cole Sharp, along with lead web developer Namik Abdulzade. The group had witnessed firsthand the difficulty ecommerce brands were having in converting customers. Urban, in particular, had headed marketing acquisition for Bonobos and grew frustrated at the dollars he was spending to drive traffic, which yielded the same sky-high bounce rates that his peers were seeing. Urban came to realize that if you could gain insight into the precise moment when people were leaving a website, you could drive real behavior change, and he sought to build a solution that would unleash that power.
To give some perspective, most ecommerce sites see an average bounce rate of 98%. Amazon is well-aware of this challenge, and has invested heavily in different ways of keeping customers within its grasp (Amazon Prime, being a key driver here). And while talk of customer conversion is just starting to bubble up to the surface, the majority of marketers are still largely reliant on views and click-throughs on ads – tactics that don’t move the needle as much as is necessary.
This presents an immense opportunity for BounceX, which aims to be the cork in the bottle to prevent unwanted churn. Firmly entrenched in the trillion-dollar ecommerce market, the company has been able to increase prospect conversion rates from website traffic by 15%, enabling it to claim responsibility for billions of dollars of ecommerce spend and a more efficient allocation of marketing dollars (according to a recent Forrester Research report, BounceX increases digital marketing productivity by 20%). When the company launched, Urban claimed that the future of the industry lay in behavioral marketing, and the company’s results to date seem to be proving out that claim. The platform sees almost 2 billion unique visits per month, and its revenue has grown 14,574% since its founding, with expectation of growing that number 500%+ by 2018.
But we didn’t look at our investment in BounceX as a purely ecommerce play. It’s inherently a SaaS platform, and it fits the bill for all of our SaaS investment criteria in a way that is truly hard to find. In evaluating our SaaS investments, we first look at founders with deep domain expertise. Check. Then we confirm that the company has placed itself squarely where its customers are. With its proven capacity for ecommerce enablement, BounceX has carved out a nice niche for itself among the ecommerce brands and publishing companies concentrated in NYC, and has found a loyal following among the city’s legions of marketers and sales folks. Check.
But perhaps the most critical component of our SaaS investment thesis is product-market fit, which BounceX has established in a big way, and well-ahead of its competitors. Having grown beyond its original core “exit intent” product that drives incremental conversion at points of abandonment along the marketing funnel, the company has rapidly scaled its product suite in ways that enable it to build a larger data set around users’ internet behavior. New products include a behavioral trigger email platform and ad retargeting, as well as others that have made it a truly indispensable platform for marketing strategy teams.
It’s rare to find an investment opportunity that straddles both sides of the Primary house, and one that truly represents the best of each. Bounce Exchange presented that opportunity, capitalizing on the growing SaaS momentum in the city and taking advantage of its right-time-right-place position in the massive ecommerce market.
BounceX is incredibly deserving of its Inc. 5000 crown. We admire the energy and deep expertise of the team, and we look forward to seeing its trajectory as it looks to take on a space that still has plenty of room for growth.