It can sometimes be difficult to cover public companies. Their companies grow a modest amount every year. Analysts from their constituents pester them with queries about gross margin expansion or sales rep efficiency. Sometimes it can get a bit boring. There are also startups that grow faster and have more to discuss.
That’s the case with Shelf.io. This morning the company revealed a number of impressive metrics, such as that its annual recurring revenues (ARR), increased 4x from July 2020 through July 2021. Shelf announced that the company has secured $52.5 million in Series B funding from Insight Partners and Tiger Global.
This is rapid growth for a startup after Series A. Crunchbase estimates that the company raised $8.2million before it went through its Series B. PitchBook puts the figure at $6.5million. The company had a small capital base and was expanding quickly before the latest fundraising event.
What is the purpose of company software? Shelf connects to a company’s IT systems and learns from them. It then assists employees in responding to questions without requiring them to search for or do any other type of research.
Customer service is the company’s target vertical. According to Shelf CEO Sedarius Perrotta, Shelf can absorb information from, say, Salesforce, SharePoint, legacy knowledge management platforms, and Zendesk. After training staff and models, Shelf’s software will be able to answer customer queries as support staff speak to customers.
Tech can be used to answer customer questions that are not directed at human agents and to provide searchable company information to aid workers in solving customer problems faster.
Perrotta says Shelf will be targeting the next sales market, and others are on their way. What role does Shelf play in sales? The company claims that its software could allow staff to submit proposals to similar deals or other content. It is possible for companies with many workers to do similar tasks, such as clicking in Salesforce or answering support questions. Shelf will be able to learn from this activity and help employees accomplish their tasks better. As the software learns, I expect that it will also improve in time.
Shelf is home to around 100 people. He hopes that he will double his size before the year ends and double it again next year.
This is where new capital comes in. It is expensive to hire people in data science and machine learning. The company will also need to have a lot of cash in order to quickly scale up its hires.
Shelf’s ability to raise such a large Series B was due to its ARR growth. This was at least in comparison to the capital raised previously. Perrotta says Shelf’s net dollar retention is 130% and there are no reports of churn. This means that its customers can be both sticky and grow organically.
Shelf’s current offerings are interesting and it has clearly found niches that it can market into. However, what is more intriguing to me about MerlinAI, the machine learning system of Shelf? Its tech could become sufficiently intelligent to be able to help and prompt employees, which would reduce the time it takes for new hires and lower employee training costs. This would create a large market.
We expect Tiger to sign this deal — a large investment in comparison to previous rounds of high-growth companies with lots of market space. The company stock was purchased at a price that Tiger paid, but if the company continues to grow over the next few years it should be de-risked. Our analysis shows that Tiger is not the most bullish market participant in long-term software market growth. This thesis is well suited for Shelf.
Publited at Mon, 23 August 2021 15:09:05 +0000