Today, we're thrilled to announce a major milestone that will allow us to invest more in the development of the subscription ecosystem for local, brick and mortar businesses. After an initial $125k investment by Y Combinator, we raised a $2.3M Seed funding round led by Two Sigma Ventures, with participation from additional investors.
We're excited to have the support of such amazing investors as we build out a subscription platform that helps local businesses run more profitably, while delivering on the higher expectations of the modern day consumer.
Doron and I met in 2014 working at OpenTable in San Francisco. Being two former founders, we instantly clicked. We spent our coffee breaks in the OT kitchen shooting ideas back and forth about crypto, new startups, or the latest problem we were trying to solve at work. We kept this up even after we left OpenTable. All the while Doron was building a world-class product and engineering team at Saildrone, and I moved to New York to lead consumer product at Resy.
Moving beyond ideas
This all changed when John Norman called me last year. John’s been running roadside farmers markets in Bethesda, Maryland for over 30 years. Norman’s Farm Market started a CSA subscription program in 2007, and it grew from a small side business, to being a significant revenue generator for their farmers markets. The problem was that they were trying to run it using the same tools as they were running their markets -- and it didn't scale. So they asked for some help.
From problem to product
We developed a proof of concept and launched it in early 2021. Norman’s Farm Market used all their online and offline channels to generate awareness for the CSA subscription. They added a section on their website where they promoted the subscription, sent out a few emails to their customers, added posts on social media, and offered incentives to customers that signed up early. Norman’s Farm Market sold over 500 vegetable box subscriptions in the first month after they launched with Per Diem, and then we realized we were on to something.
The pandemic crushed many small businesses, but web-savvy retail and restaurant chains like Panera Bread, which launched a coffee subscription program in the midst of the pandemic, were able to power through by driving recurring customer traffic. We realized there was a huge opportunity to introduce the benefits of subscriptions to all brick-and-mortar businesses on a local level. Subscriptions enable small business owners to compete with programs like Amazon Prime and Starbucks Rewards, while encouraging local customers to become regulars.This is when we decided to go beyond farmer’s markets, and we started adding local coffee shops, bakeries, and restaurants to the Per Diem platform.
Empowering local businesses
Online companies have been thriving on the subscription model for years (think Netflix and Salesforce.) Technological and psychological barriers have prevented the subscription business model from being adopted in the offline world, especially for the small brick-and-mortar retailers that are the lifeblood of our communities. But that all changed during the pandemic. Subscriptions have the power to change the game for independent business owners by receiving an upfront commitment from their customers and recurring traffic, which enables the business to provide more value and a better service.
IXV Coffee began an espresso subscription program in the Boerum Hill neighborhood of Brooklyn. With IXV’s commitment to sustainability and ridding the world of single use plastic containers, Jenny Cooper started offering the program on the premise of filling up with reusable cups. IXV now offers a full menu of 7 and 30 day espresso, drip, matcha, and coffee bean subscriptions. Since the program started, the average subscriber visits IXV 5 days a week. That’s a lot of espresso!
Sarge’s Deli is a true New York deli experience, and the number one place for so many old world specialties, which now includes their famous homemade matzo ball soup available via subscription. Soon-to-be additions to the subscription menu includes their in-house cured corned beef and pastrami, bagels by the dozen with schmear, knish 4-packs, and a rugelach subscription that’s perfect for any sweet tooth. With more people working remotely this past year, Sarge’s adopted subscriptions to help New Yorkers enjoy all their classics from the comfort of their own home.
One Acre Farm is a family farm in Montgomery County, Maryland. Michael Protas offers shares of fresh grown produce for a twenty week season, starting in early June and going to Mid November. Every week Mike and Charlotte box up their CSA subscriptions and drop them off at convenient pickup locations in Washington DC, and the suburbs of Maryland. Mike decided to switch to Per Diem in order to streamline pickups and deliveries, get better analytics on his business, and to improve the communications between his farm and his CSA subscribers.
What's next for Per Diem
Local businesses are the heart and souls of our communities, and this new investment will enable us to build the tools brick and mortar businesses need in order to take advantage of the shift to a more digitized economy. The last year has seen massive disruption to the way we live and the way businesses operate, but it also presents an opportunity to build more sustainable businesses that serve the needs of the modern day consumer.
Thanks to our partners and investors for joining us on this journey, and to our partners’ customers for supporting local businesses.
Tomer & Doron
Co-founders, Per Diem