With $15.5 million in new funding in the bank, Capillary Technologies is bringing customer relationship management solutions to the cloud

By Editor October 15, 2012
Capillary Technologies logo

Capillary Technologies logoA Q&A with Capillary Technologies co-founder, CTO and President-Americas, Krishna Mehra. The Singapore–based company was founded in 2008 and raised $15.5 million in Series A funding in late September from Sequoia Capital, Norwest Venture Partners and Qualcomm Ventures.

SUB: Please describe Capillary Technologies, and the value proposition you offer to enterprises.

Mehra: Capillary is the world’s fastest growing provider of cloud-based customer engagement, CRM and analytics solutions to retailers. For a retailer or a B2C business, we would help them build their complete customer strategy—starting from data capture through social integrated means, customer analytics, business intelligence through big data analytics and communication tools. We are typically able to drive a three-to-five percent increase in store sales, and have repeatedly demonstrated this in more than 10,000 locations globally, and for more than 50 million end customers.

SUB: Who are your target users?

Mehra: Our target users are typically retailers of all shapes and sizes—starting from a five store local chain in Los Angeles to a multi-billion dollar global retailer. Our cloud offering is able to scale up and down based on their needs and requirements. We work with retailers such as Pizza Hut, Robinsons, United Colors of Benetton, Puma, Nike, Marks & Spencer and so on.

SUB: Who do you consider to be your competition?

Mehra: We are an integrated solution covering everything the retailer needs in this space—in order to replace us with competing solutions, the retailer would have to buy expensive and cumbersome packages which cost millions of dollars in the space of CRM, business intelligence, campaign management, social CRM and so on. Without naming any individual competitor, I would say that just making them work together takes so much cost and effort that in most cases it takes years to get anything in place, and decades before any output can be seen.

SUB: What differentiates Capillary Technologies from the competition?

Mehra: Our integrated approach as described above ensures that the whole is far greater than the sum of its parts. It’s easy to deploy and we can typically get started in a matter of days, and the retailer starts seeing value within weeks. Apart from that, we have also managed to build a far better social and mobile integrated offering which treats them as first class citizens, rather than a bolt-on. Our analytics capability is legendary and industry-leading, and ensures that we mark the data work a lot harder and achieve a lot more value.

SUB: When was the company founded and what were the first steps you took in establishing it?

Mehra: The company was founded in 2008, and we pivoted in 2009 to our current business. Since then we never looked back—with industry leading players signing up for our solution, and winning prestigious global awards such as the Qualcomm QPrize 2009, we invested in building a super star team which was able to help us build the right kind of solution and business value for our customers.

SUB: What was the inspiration behind the idea for Capillary Technologies? Was there an ‘aha’ moment, or was the idea more gradual in developing?

Mehra: We started with focusing on the confluence of mobile and retail, and believed there was a lot of opportunity therein. As we started speaking to prospective customers, we realized that there was an immense need for building customer loyalty in the aftermath of the global financial crisis in 2008-09 but it couldn’t be done in the same way as before—nobody carried plastic loyalty cards, most programs were a ‘me-too’ offering and not data driven, and achieved little business impact. That’s when we decided to rethink it from first principles—questioning every assumption, and building everything up from scratch. This has given us a massive first mover’s advantage—and continues to demonstrate our offering is far superior to competition.

SUB: How did you come up with the name? What is the story behind it?

Mehra: Capillaries carry the oxygen in the body, and we always believed that data and mobile are going to be the oxygen that retail needs to break the limits and grow to the next level. We believe in oxygenating each and every department of the retailer through the use of valuable customer data, and hence the name.

SUB: What have the most significant obstacles been so far to building the company?

Mehra: Building a global business is challenging since there are so many things that you don’t know, especially if you are in a sunshine industry like ours. We have had to experiment at each and every stage since there’s not much legacy to go by in most markets and spend a lot of time understanding what works and what doesn’t. Also, getting the ecosystem in place for the product, world class analytics, and global delivery requires significant investment and know-how, which takes time to build.

SUB: You just raised $15.5 million in Series A funding. What are your plans for the funds?

Mehra: The funding is going to be used to build out our sales and marketing presence globally, along with significant investment in product and delivery excellence. We are investing on all fronts, exploring new markets and expanding our product portfolio, and we value the know-how that Sequoia and Norwest bring to the table.

SUB: Why was this a particularly good time to raise more outside funding?

Mehra: We have a great product, and for which we were able to show validation in a number of key markets. Having taken the product and market risk off the table, we are set for growth in the next couple of years, and needed the firepower to go all guns blazing and build on our first movers advantage. It was a good time to work with Sequoia and Norwest hence.

SUB: How does the company generate revenue or plan to generate revenue?

Mehra: Capillary is a traditional SaaS license business—we charge retailers a certain fee per store per month and show them multiple times value on that they are paying us on a continuous basis.

SUB: What are your goals for Capillary over the next year or so?

Mehra: Over the next couple of years, we want to grow rapidly and consolidate our leading position around the world. We have already started making substantial investments in the United States, the UK, South East Asia and China, apart from our existing leadership positions elsewhere.

Capillary Technologies – www.capillarytech.com