Subscription-Payment Recovery Firm Gravy Raises $4.5M in Series A Funding
ATLANTA, Feb. 19, 2021 /PRNewswire/ -- Subscription-based payment recovery start-up Gravy has raised $4.5 million in Series A funding in its most recent funding round and the first including institutional investors. The funding round was led by Arlington Family Partners, based in Birmingham and one of a handful of family offices headquartered in the southeast. Arlington Family Partners also manages the proceeds from the acquisition of an earlier business, The Rocket Company, involving Gravy co-founder and CEO Casey Graham and co-founder and Chief of Staff Renee Weber.
Gravy provides technological and human expertise to reduce "involuntary churn," or the unintentional discontinuation of a subscription service due to the failure of the associated payment method. Most subscription businesses will send an automated email to inform the user that their payment method has failed, or use another method of automatic communication, like a cell phone notification or a text message to the cell phone number associated with the account.
Gravy sells its users a package including both technological solutions and retention specialists based in the U.S. with expertise in subscription services. Users pay a fee tiered by transaction volume, ranging from $997 to $8,000 per year. Gravy then integrates with the user's payment processor, subscription managers and sets up a channel on the company's Slack. The company plans to hire an additional 67 workers, acquire new clients and further deveop its core customer service and technology offerings.
The problem of declined subscription payment methods was present in The Rocket Company, later acquired by Ministry Brands, which provides coaching and other resources to churches. While at The Rocket Company, Gravy co-founders Graham and Weber found that subscribed customers whose payment method failed responded to personal communication far more often than automated notifications, which users often dismiss before reading.
After receiving a higher offer from Ministry due to increased user retention, largely due to this combined human-and-automation approach, Graham and Weber went on to found Gravy to export them to other start-ups, many of which invest heavily in growing and scaling their businesses and which cannot always devote in-house personnel to user retention. This allows start-ups to make their costs more predictable and gives them another lever for growth via higher customer retention.
Businesses can specify a preference for either email or text communication, then Gravy will task one of its specialists to reach out to the customers whose payment methods have been declined. If the customer was unaware of the payment failure, Gravy can walk them through the process of making the back payment and keeping their subscription benefits active immediately.
Alternatively, if the customer is unhappy with their subscription or unable to make the regular payment, Gravy specialists can offer a more tailored payment plan, from stay bonuses to temporary payment suspensions, depending on the individual circumstances.
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