If a popular coffee chain can raise over $40 million from the San Francisco tech community, maybe it shouldn’t be surprising that a flower company can count Ashton Kutcher and Joe Montana as investors. And as techies seek out non-technical problems to solve and non-techies become angel investors, that’s what BloomThat has done.
The on-delivery flower startup just raised $2 million in seed funding from SV Angel and a group of angel investors including Ashton Kutcher, Reddit cofounder Alexis Ohanian, Baron Davis and Joe Montana. The pain of ordering flowers apparently is felt from Hollywood to the NFL Hall of Fame.
“We had all been in the position before of sending flowers to a wife or girlfriend and it’d been a less than stellar experience,” says cofounder Matt Schwab. “We wanted to look at building something that solved those pain points personally.”
So BloomThat headed to Y Combinator, the famed Silicon Valley accelerator, to pitch the idea of on-demand floral delivery that can get a gift to someone the same day, making it a more casual and impulsive option of interaction than just sending a bouquet for condolences or a special occasion.
The startup says the key is to use predictive modeling to know where people will order flowers in advance, allowing BloomThat’s network to adjust inventory accordingly. The company only offers a small range of products to ensure consistency of quality and works with courier services to take the items the last mile for drop off. The company’s modeling can determine which neighborhoods will see orders within just a couple of units of inventory, says cofounder Chad Powell. And 90% of deliveries make it into the recipient’s hands on first try on time off thousands of orders. Customers are typically sending gifts about once every two months.
And unlike the big online companies like 1800-Flowers.com, BloomThat doesn’t use a bid-based system that auctions off a local order to a nearby florist willing to take it on the lowest margin, which can lead to concerns about the use of expiring inventory or uneven quality. Florists only work with a couple offerings and must send photo evidence of the units leaving their stores. Powell says that each sees a higher percentage cut per order than the 20-30% typical of an online wire service.
We’re still talking about flowers, though–a business with a ton of competition from search-optimized websites to other startups like The Bouqs, a quality-focused subscription model out of the Los Angeles area.
So BloomThat’s founders admit it doesn’t hurt to have some big names associated with their brand like Kutcher and Montana, who has a close relationship with SV Angel ‘super-angel’ Ron Conway. Montana had taken some time off from investing after a checkered experience with HRJ Capital, a now-defunct firm once run by him and two of former teammates, but is now a regular at Y Combinator with his wife and adult son looking for startups in which to invest.
Montana now has about ten early stage investments, he says, with a theme of looking for companies that solve basic problems for a consumer. “Think about when you order flowers–it takes forever, it’s nuts. The business model these guys came up with makes a lot of sense, and it makes sense for the flower shops they partner with.”
But how does playing quarterback give expertise in helping to operate a flower company? Montana says that when he typically talks to companies, his experience as a leader and team-builder in the NFL can apply to the startup world. That can also mean knowing when to get out of the way, something Montana dealt with late in his career as Steve Young became the starter for the 49ers. And for big games, Montana says, he will entertain the inevitable prediction questions even techies will have.
BloomThat’s founders say they enjoy having a lift from such investors but that their angels do put in some work to help. Kutcher apparently has flown up for long meetings with the team on behalf of his investing firm, Ashton Kutcher and Guy Oseary’s A-Grade Investments. The actor writes FORBES: “We believe that BloomThat is at the intersection between artistic creation, technology & service. They honor efficiency and quality product. These are the kinds of companies we like to support.”
Still, BloomThat has a lot more to prove than just that it can make money in San Francisco. The company says its margins can work in 180 markets across the United States and will be moving to two more by the end of the year, and insists that its courier system can work even in traffic-nightmare cities like Kutcher’s own Los Angeles. The team’s now 15 and will likely be hiring more.
For now, however, BloomThat is a pure San Francisco creation, its strongest markets the tech-friendly neighborhoods of the Financial District and South of Market, where Tuesday is the busiest day as people settle in after the weekend. And for that, it doesn’t hurt to have the local football team’s most famous player there to help. But BloomThat must hope Montana can give better advice than his Super Bowl prediction–he had the Denver Broncos all the way.