The world has been turned upside down in the past few weeks, but a business lesson remains important: Treating your customers well is the best way for future business strengths, especially in times of extreme stress.
As companies grapple with the ongoing economic crisis, managers are shifting resources from customer acquisition to customer loyalty – and this has proven to be very lucrative for startups that serve the customer success market.
A typical example: The New York City-based Catalyst, which I introduced last summer after its $ 15 million Serie A under the direction of Accel’s Vas Natarajan, has seen tremendous sales growth in recent months. According to CEO Edward Chiu, the data-driven customer success platform has recorded sales growth of 380% since Series A financing.
Strong sales growth is (unsurprisingly) attractive to investors, and at a moment at random the company signed a $ 25 million Series B term sheet with Spark Capital when the COVID-19 crisis began.
Chiu said Catalyst wasn’t looking for the investment because much of its Accel round was still in the bank, but he ultimately decided that having the additional capital at hand from an impending economic recession was the right decision. The capital was officially transferred to the bank account at the end of March and managed by growth investor Will Reed.
While the company did not disclose the valuation, a knowledgeable source reported a valuation of $ 125 million. This is a serious review for a company founded two years ago in April 2018.
Except for more funding, the core story of the company’s product remains the same. Catalyst wants to bring together all of the data sources and team members who interact with customers – from designers and engineers to customer success managers – in one dashboard to ensure that all users have accurate, up-to-date access to all the information they need, every customer’s health.
The only airbrush: The company’s previous URL from getcatalyst.io became catalog.io and was officially restarted this morning.
A growth area that the company is exploring outside of the B2B area of its existing customers is healthcare, where the company has seen some inbound interest. Chiu said Catalyst is investigating the steps required to achieve HIPAA compliance with its platform and hopes to expand Series B capital into other sectors over time.
The last time we checked in to the company, Catalyst had 19 employees and had 40 employees targeted by July 2020. According to Chiu, Catalyst already has 35 employees and is expected to employ 60 to 70 by the end of the year.