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Alloy raises $4M to build out its e-commerce automation service

Alloy Automation, a startup that was part of the Y Combinator Winter 2020 cohort, announced today that it has closed $5 million across two rounds, the most recent of which brought $4 million to the company in October of 2020. The new funds were raised at a $16 million pre-money, $20 million post-money valuation, Alloy […]

Alloy Automation, a startup that was part of the Y Combinator Winter 2020 cohort, announced today that it has closed $5 million across two rounds, the most recent of which brought $4 million to the company in October of 2020.

The new funds were raised at a $16 million pre-money, $20 million post-money valuation, Alloy told TechCrunch.

The company’s latest fundraising was led by Bain Capital Ventures and Abstract, with participation from Color Capital, BoxGroup and a collection of individual investors, including Shippo’s Laura Behrens Wu.

TechCrunch spoke with co-founders Sara Du, CEO, and Gregg Mojicam, CTO, about the round, their market and their experience in Y Combinator.

Du, a Harvard dropout, and Mojicam, who skipped college altogether, met after the former emailed the latter about speaking at an open-source conference. The event didn’t end up happening, but the pair stayed in touch. Du wound up running a small streetwear store, interested in automation and app-connecting tools like Zapier, which she found to be too simple, and MuleSoft, which she described as very expensive. Out of a desire for something in between that would let her connect apps, Alloy Automation was eventually born.

After a launch on Product Hunt in 2019 offering “complex automation made easy, and with no code,” Bryant Chou, a founder at WebFlow, put money into the company. Alloy was looking to build prosumer automation tooling and now it had material backing.

The startup then went through Y Combinator the next year, sharpened its focus to the e-commerce market and, as it has just announced, attracted millions more from a cadre of investors.

The shift to focus on e-commerce from a broader toolset came from customer pull, the co-founders said. After starting out with a number of integrations for Twilio, HubSpot and other services, the team, toward the end of their time in Y Combinator, noticed places in the e-commerce world into which their product fit neatly. Alloy’s tech was being used by Shopify and BigCommerce customers, helping make e-commerce a fertile area for the company, its co-founders said.

Alloy’s tech helps e-commerce players link services to help automate their shipping, marketing, analytics and other tasks. One example that Du provided TechCrunch was customers using Alloy to connect SMS functionality to fulfillment tools. Doing so might allow small e-commerce companies to automatically text customers when their order ships, for example.

During Y Combinator, the pair said that they might have been the youngest set of founders in their batch. But despite being what they described as not the hottest company in the batch, they skipped the accelerator’s well-known demo day, having already raised capital.

Du said that it’s not generally encouraged to skip demo day. But as Alloy has gone on to raise even more capital, the decision seems to have worked out for the company. The founders also cited a desire to stay in stealth as part of their reasoning for skipping the investor confab, telling TechCrunch that they wanted to stay quiet and build until they “really [had] something.”

Alloy’s $4 million round came from a relationship that started when the startup had shown off its tech on Product Hunt. Bain had contacted the startup then, stayed in touch, and later did due diligence on it by talking about Alloy with e-commerce startups in its own portfolio.

Why $4 million? Per its founders, Alloy had barely dug into its original $1 million round when it raised more, but as the pair want to build out their go-to-market efforts, the capital made sense.

The founders said they intend to raise a Series A for Alloy, but that their current capital could float them for two or three years; their startup is a COVID baby, they joked, and after having some investors pull out of their pre-seed round, Alloy is conservative with its capital.

Finally, let’s talk growth. Per the pair, Q4 2020 was good for Alloy. That’s not surprising, as they serve e-commerce companies, firms that love holiday-boosted fourth-quarters. The founders told TechCrunch that during the fourth quarter, their in-house Slack channel set up to note payments, signups and other positive occurrences went off chronically.

The team today is the co-founders, three engineers, a designer and a marketer, spread across four time zones, with workers in America, India and the Philippines. Alloy intends to hire sales staff, new engineers and a customer success denizen.

Alloy’s software costs from $200 to $1,000 per month or more, depending on need. Let’s see how far it can scale on its new capital base.

E-commerce optimization startup Tradeswell raises $15.5M

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