In 2020, while working as a product engineer at Pinterest, Katherine Wu started a side hustle. Wu started a milk tea company, Ohtea, hoping to partner with local grocery stores and gift shops to carry her tea. She quickly realized how difficult it was to not only find all the potential retailers, but also to find contacts for each location. The fragmented market was extremely difficult to navigate, which contributed to the company's demise.
“I couldn't achieve product-market fit,” Wu told TechCrunch. “It's very hard to find retail information. I had to pull information from several tools, open big spreadsheets, and figured I had to solve my weaknesses on my own.”
That experience formed the basis of Openmart, a startup she co-founded three years later. Openmart describes itself as an AI alternative to Zoominfo. The company uses AI to gather data from public business reports, maps, customer reviews and other sources to compile a database of local businesses organized by type. Users tell Openmart what kind of businesses they want to sell to, and the startup provides them with a list of potential sales leads, including details such as the names and contact information of each business' owner.
Wu founded the startup with Richard Ho. The two met while working as interns at Pinterest and later reunited as part of the Asian entrepreneur community. The two bonded over their love of dogs — Wu has a golden retriever and Ho has a Labrador — and when Ho saw that Wu was thinking about starting a company, he wanted to get involved.
While the original idea was born out of Wu's inability to bring his small side business to local businesses, the ultimate mission behind Openmart turned out to be a bit different: Wu said that while researching the idea, he found that larger companies also struggled to sell to local businesses, so he decided to focus on developing products for that group first.
“Our main focus remains local businesses,” he said of the companies covered by Openmart's database. “We see this as a big takeaway. We believe this AI agent can contribute to all outbound sales as we move into more areas beyond just physical businesses. The first wave of AI won't replace lawyers or doctors, but will replace reasoning tasks that are less intelligent and have a lower logical sequence.”
The company was founded late last year and was a member of Y Combinator's W24 cohort. During its beta phase, Openmart landed several paid customer trials, ranging from Fortune 500 companies to Series B and Series C startups. Their YC co-founders were some of the first customers. Wu said the company will initially focus on generating these kinds of leads for large enterprise customers, with plans to develop a mid-sized enterprise tier in the future.
Openmart has raised $2.75 million in a seed round and just exited beta mode. The startup raised funding from investors including Y Combinator, Rebel Fund, Afore Capital and several other VC firms. He said the company was careful to set reasonable fundraising targets and turned down investors who pressured it into an oversubscribed round. He said the company followed the fundraising advice of YC Group partner Gustaf Alstromer and is looking to maintain 50% ownership through Series B.
“It's a pretty simple math problem,” he said. “You want to dilute as little as possible. All you need is [to raise] “We need as much capital as we can to survive until the next round. The amount of capital we need is a bottom-up calculation, rather than just wanting as much capital as possible.”
He added that AI will help engineers be more productive so they won't need as much capital to hire and can instead focus on smaller, more efficient engineering teams.
He said OpenMart is initially focused on aggregating data on local businesses, but plans to expand into other verticals in the future. For many startups, it makes sense to expand horizontally — offering the same services to different verticals or business types — but the company may need to think carefully about which verticals to expand into. In areas such as B2B software, there are fairly well-established sales lead generation software players, such as LinkedIn Sales Navigator and Crunchbase.
He said that even if the company has plans to expand in the future, it will remain focused on its roots in small and medium-sized businesses, adding that the company wants to be seen as an expert in finding contacts for small businesses.