onetext Raises $4.5M to Reinvent Shopping with Text

Rethinking Online Checkout: OneText's Text-to-Buy Network

The standard process for completing online purchases is often burdened with unnecessary complications. While numerous companies are developing solutions to streamline online checkout, few are fundamentally redesigning the experience. OneText is an exception, creating a “text-to-buy network” that empowers customers to finalize purchases directly through text messaging.

Seed Funding and Founding

Founded by individuals with prior experience at PayPal, the company recently secured $4.5 million in seed funding. This investment round included contributions from Khosla Ventures, Coatue, Citi Ventures, Y Combinator, Good Friends, and musician Matt Bellamy of Muse.

The Genesis of the Idea

Jonathan Fudem, co-founder and CEO, conceived the idea during his tenure on the checkout team at PayPal. He observed that many promising startups encountered a common obstacle: persuading merchants to adopt new payment systems.

Fudem explained that this is a challenging proposition, as many merchants lack the autonomy to select their checkout provider; the decision is frequently dictated by their e-commerce platform.

SMS as a Solution

By leveraging SMS technology, OneText circumvents the need for merchants to overhaul their existing website checkout processes. While platforms like Instagram and WhatsApp offer e-commerce functionalities, Fudem emphasizes the importance of brands maintaining direct, proprietary relationships with their customer base.

Differentiating from SMS Marketing

OneText positions itself as an alternative to conventional SMS marketing companies, which are often associated with impersonal mass messaging and unsolicited links.

The platform utilizes a combination of AI-driven two-way communication and human oversight to enhance conversion rates by 20% to 30%. Features such as cart abandonment recovery, post-purchase upselling, and personalized shopper recommendations significantly contribute to this improved performance.

Underlying Technology and Security

OneText operates its own digital wallet, integrating with a brand’s existing payment processor to facilitate transactions. Customer payment details are securely stored following the initial purchase.

Subsequent orders can then be placed with a simple text reply.

"Consentful" Automation and Reordering

This “card-on-file” system, as described by Fudem, mirrors the convenience of charging purchases to a hotel room. To ensure transparency, OneText employs what it terms “consentful” automation.

Before processing a reorder charge, OneText sends a text message informing the customer that the payment will be processed within 24 hours, unless they explicitly cancel. This operates on an opt-out basis.

Future Expansion and Network Vision

The company intends to broaden the network, enabling shoppers to utilize their saved profiles across various brands. This will include pre-populated checkout information and more intelligent product recommendations.

Ultimately, OneText aims to establish a comprehensive, SMS-based payment network spanning multiple brands.

Building the Network

“Developing a consumer wallet that is ten times superior is a considerable undertaking,” Fudem stated. “However, we can construct a business-to-consumer texting platform that replicates the ‘charge it to your room’ experience, but with your phone number as the identifier. This is how we will build the network.”

Growth and Current Clients

OneText completed the Y Combinator program in 2023 and has been quietly developing its platform since Demo Day. Currently, the platform serves mid-sized e-commerce businesses generating between $10 million and $100 million in annual revenue.

The company also supports smaller startups and larger enterprises, according to Fudem.

“We’ve experienced a 3x year-over-year growth rate and are generating millions in revenue,” added Fudem, who co-founded the company with CTO Daniel Brain.