Social media websites have become very good at serving advertisements to shoppers. Visit a bedding site on Google and you will surely get Facebook ads for bedding. The same functionality is increasing for e-commerce sites as well, helping shoppers stay on the sites longer and engage with more products.
That functionality, though, can be fraught with problems – poor recommendations can turn off consumers, and data privacy issues are a growing concern. Brands with global presences – and in this day and age that is nearly every online retailer – must also adhere to European privacy standards.
It’s challenging, which is why companies are looking for solutions to solve these privacy concerns while still delivering consumers top-level brand experiences, something in the industry that is referred to as personalization.
XGen is one of those companies, and its ability to provide that high level of personalization while securing users’ privacy has helped it land a $7.5 million seed round of funding.
The round included investment from Florida Funders as well as strategic investors Mark Lavelle, former CEO of Magento; Mark Britto, executive vice president and chief product officer at PayPal; Gary Marino, former chief commercial officer for PayPal; Brigitte Kleine, operating partner at growth equity firm Stripes and former president of retailer Tory Burch; and Moisey Uretsky, co-founder of cloud infrastructure provider DigitalOcean.
“I was very happy with who we got [as investors],” Frank Faricy, founder of XGen, told Modern Shipper, noting that the company chose the “hybrid” round as opposed to a pre-seed or seed round. There are also several angel investors involved as well.
Founded in mid-2018, XGen, with offices in Tampa Bay, Florida, and Vancouver, British Columbia, Canada, uses artificial intelligence to enable brands to add personalized content and recommendations to improve brand loyalty and retention.
“E-commerce is growing rapidly and XGen is aligned with that macro trend. They’re the element missing in the e-commerce tech stack,” Tom Wallace, Florida Funders managing partner, said in a release. “XGen is driving significant revenue increases for some of the world’s most recognizable fashion, jewelry and cosmetic brands, and their personalization approach to make an individual’s specific needs and preferences a priority is what both consumers and marketers not only want but need.”
XGen’s technology offers visitors to e-commerce sites AI-generated product recommendations while its XEngage dynamic content product continuously changes the content on sites, showing customers more relevant products, to help keep customers engaged and on the site longer.
For brands utilizing email and other social content platforms, XIgnite and XSurge are able to dynamically display the most relevant content to users. XIgnite integrates with all social platforms and is individualized for users, while XSurge provides personalized email content.
All the products track key metrics such as active users, conversion rates and click-through rates.
Faricy said the product is “very tech intensive,” including a lot of functionality that is “revolutionary because we had to break the [mold].”
XGen started hiring sales staff late in Q3 2020 and in Q4, so it’s “only been like five months in earnest” that the product has been available. It was tested throughout 2020 with several clients, Faricy said. It is a software-as-a-service solution that matches the experience social media users get from personalization on e-commerce platforms. He declined to provide revenue numbers or customer counts at this time but noted XGen saw “over 400%” growth from Q4 2020 to Q1.
“Personalization is the most effective way of driving on-site conversion rate,” Faricy said. “What is personalization? It’s adapting an experience to match a consumer’s needs. Personalization is a way to segment the audience – then drive logic on what those consumers should be recommended.”
Faricy said many retailers are still displaying “bestsellers” through a database query, but that is not an effective, or even a personalized way, to engage a potential customer.
“A lot of these things are not being driven in real time,” he said, “so you end up with a system that personalizes to a group of people that may be 30,000.”
XGen takes that several steps further, Faricy explained, by using machine learning to automate the recommendation process, “but more importantly, [to] predict the consumer’s next step.” It also updates automatically with inventory so visitors are not shown items that are not available (unless the retailer wants those items shown).
The result is a truly unique personalized experience, he said. “It is a revolutionary way to do this.”
The XGen solution can be integrated in hours and is a no-code/low-code solution. The funding round will be used to scale the product, add new features, and ramp up sales staff and customer support. Faricy said XGen will look for a Series A round of funding soon as well.