AI search platform Constructor raises $25M
Constructor, an AI-powered product discovery and search platform for e-commerce, closed a $25 million Series B round, CEO Eli Finkelshteyn tells Richard.
Why it matters: The company wants to help e-commerce retailers build stronger moats against tech giants like Amazon.
Zoom in: The company now has a $550 million valuation, triple what it was when it raised a Series A in 2021.
- Sapphire Ventures led the round with participation from existing investor Silversmith Capital Partners.
- Proceeds will serve as a cash reserve and could be invested in experimental R&D projects tied to generative AI, Finkelshteyn says.
- The company has raised a total of $85 million to date.
What's next: The company will likely achieve $100 million in annual recurring revenue (ARR) over the next year or two, at which point it can begin to contemplate an IPO or related event, Finkelshteyn says.
- It will probably not raise any more money unless a big opportunity arises that the CEO can't foresee at this time, he adds.
By the numbers: Over the past year, the company says, it has increased its customer base by 50% and headcount by 45%.
- In the last six months it has facilitated 100 billion shopper interactions.
- About 70% of its annual budget is spent on R&D, Finkelshteyn says.
How it works: Its core technology is a clickstream-based AI that produces search results based on customer behavior and shopping preferences rather than matching key words.
- Customers include Under Armour, Petco, Sephora, Birkenstock, Target Australia, Bonobos and Petco.
- It helped generate an additional $40 million in revenue for Sephora and helped Bonobos increase search revenue by 9% and Petco increase search conversions 13%, per its website.
Catch up quick: Constructor launched AI Shopping Assistant, a conversational product discovery tool combining generative AI with Constructor's personalization technology.
- It's also been expanding internationally, particularly across Europe, the Middle East and Africa.
What they're saying: AI is valuable as a tool only if it improves the user experience and boosts revenue, Finkelshteyn says.
- Plenty of AI applications look "shiny" and "cool" but don't impact sales, he notes.
