With Y Combinator Demo Day kicking off tomorrow morning, startups in the current batch are hurrying to make a little news before they show off their recent growth to investors. The list includes Runway, Mono, Pangea and Flux.
Add Chums to the mix. Chums is a social shopping service that helps friends suggest products to their pals. And the startup has put together a total of $3.5 million across two pre-seed investments.
TechCrunch spoke with Noah Elion, one of Chums' founders, about the round. He said that his company closed $1 million in December, later looking to raise another $1.5 million. Interest ran high for shares in the startup, so Chums wound up raising $1 million more than its latter target, for a combined total of $3.5 million.
The company declined to share the cap at which the funds, raised via a SAFE, were secured.
The $1.5 million target was based on the amount of capital that his company would need for the next 18 months, Elion said. The final sum came from Ludlow, Shrug, Contrary Capital and Fuel Capital, among other firms and individuals.
How did a company in the midst of Y Combinator manage to raise an old-school Series A round of capital despite launching its product just a few weeks ago? The background of its founding team helps some. Co-founder Dick Fickling was an early engineer at Honey, for example, another shopping-focused startup that had a material exit.
The startup's service is a mobile app that allows users to follow product-types that they may want to purchase, and suggest goods to one another that might fit their friends' needs. It made its way to market three weeks ago, or as Elion explained, right before his company went out fundraising. TechCrunch asked about early traction, to which Elion said that it was too soon to say much, though his team has seen “encouraging” levels of engagement thus far.
The startup is four people today, which its website describes as a group of friends. This is mostly true. Elion and Fickling teamed up after the former built a predecessor to Chums — called Chums Referral — becoming friends in the process. Fickling was previously colleagues and friends with the folks who comprise the rest of the team, namely Lauren Williams (director of engineering) and Lena Gasilina (product).
The team is looking for a designer and a front-end developer, but after that is done hiring. It intends to stay at six people until its next round. Why? It wants to reach product-market fit with a half-dozen staff. If it does, it should be able to raise more money at a comfortable valuation. There's some sense in the idea, though it was slightly odd to hear a startup plan measured growth to preserve capital in 2021.
Chums makes money on commissions from recommended products, splitting the revenue with users. Elion declined to share the network, or networks, his company is working with to secure commercial ties with retailers, but did note that in time Chums will go direct to secure better deals.
With a closed round, most of its team in place and an app in the market, it's now up to Chums to prove Elion's view Google is overly gamed and Amazon is best when you know what you are looking for. In the co-founder's view, people liked malls for their “diversity of content” and as a space for “spontaneous shopping.” Perhaps Chums can fit that niche, and, in the process, generate some serious coin.