Venture Capitalism

Signpost, the Startup That Promises to Drive Customers to Small Businesses, Raises $3.75 M. From Spark Capital

A one-stop shop for local businesses struggling with marketing online.
stu wall iiii Signpost, the Startup That Promises to Drive Customers to Small Businesses, Raises $3.75 M. From Spark Capital

Mr. Wall via Twitter

Say you’re a small business trying to figure out whether a deal with Groupon or ad on Yelp will bring customers to your door. That already-tricky marketing decision gets more complicated when you factor in fragmentation among daily deals sites and all the other publishers that could potentially host your ad. If you wanted, however, you could pay a New York-based startup called Signpost $99 a month to make the decision between a Google Offer, Living Social, or ad on Yelp for you based on the type of traffic you’re trying to drive to your business. “Our quick pitch is we want to be a one stop marketing platform for local business,” Signpost CEO and cofounder Stuart Wall told Betabeat.

Since late last year, Signpost has already signed up 3,500 small businesses, 93 percent of which renew with the service each month, said Mr. Wall. That might explain why Spark Capital just signed on to lead the startup’s $3.75 million Series A round. Signpost had already raised $1.25 million in seed financing from Spark and Google Ventures back in 2010.

According to Mr. Wall, Signpost is also leaving the option of a $1 million follow-on round on the table from existing investors who have expressed interest, although no decision has yet been made. Mr. Wall said he’s in a good position because Signpost works off the revenue it generates rather than investment, which will be used, in part, to boost its sales team. “The cost for us to acquire a customer, versus expected value is over 5.5 multiple from sales people,” he said. “But you need a little bit of capital to fund that growth.”

As part of the announcement, Signpost revealed that it will be bringing on Christopher DePatria, former head of sales at AOL’s Patch, to lead its sales force.

Of course, Signpost isn’t the only New York startup going after online marketing for small businesses. Yext and Yodle, where Mr. DePatricia once worked, also help businesses show up in local search results and enhance their listings. But Mr. Wall says Signpost’s special sauce is its focus on driving purchases over brand awareness. “Our view is brand advertising might make sense for Pepsi,” said Mr. Wall. But for small businesses, they focus on offering deals to drive sales in the acquisition campaigns for volume, like a 50 percent off coupon on Google Offers, one of Signpost’s 1,200 publishing partners, as well as utilization campaigns for filling slow periods or filling in a certain time of day. In the case of one Lasik eye surgeon, Mr. Wall says Signpost was able to generate $20,000 in sales in a week.

“There are so many platforms out there that to be on to be effective, it’s nearly impossible to do it by yourself,” said Mr. Wall, who added that Signpost “white labels” content to make the experience seamless.

As for all those open sales positions, Mr. Wall said Signpost aggressively goes after hiring “passive candidates” among New York’s young and hungry. So, in other words, poaching? “We tend not to do it with other startups as a rule,” said Mr. Wall. Instead Signpost goes after, “Other companies where we don’t think it will hurt too much.” Like AOL? “I don’t know if I feel like mentioning specific companies,” he demurred.

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