Neatsy.ai Raises $1M Seed Funding - Sneaker Fit Startup

Neatsy.ai Secures $1 Million Seed Funding Following Strategic Pivot

Neatsy.ai, a startup specializing in sneaker fit technology, has successfully raised $1 million in seed funding. This investment follows a shift in the company’s business model towards a B2B approach. The funding round included participation from Cabra VC, Flyer One VC, and several undisclosed angel investors.

From Machine Learning to Fit-Tech Solutions

Founded in March 2019 by Artem Semyanov, previously the machine learning team lead at Prism Labs, Neatsy.ai is now concentrating its efforts on providing its fit-tech solutions to e-commerce retailers through a Software Development Kit (SDK).

Leveraging iPhone Technology for Precise Foot Scanning

The company’s technology utilizes the 3D scanning capabilities found in the iPhone X and subsequent models – specifically, the TrueDepth camera used for FaceID. Currently, this limits functionality to users with compatible iOS devices.

Supported Brands and Expansion Plans

At present, the AI algorithms have been trained to offer personalized fit recommendations for a select group of sneaker brands, including Nike, Jordan, Converse, Adidas, Reebok, Yeezy, Puma, New Balance, Asics, Under Armour and Vans. However, the seed funding will facilitate an expansion of these recommendations.

Accuracy and Privacy in Foot Measurement

Neatsy claims its technology can measure foot dimensions with an accuracy of 1-2 millimeters. Importantly, all scanning processes are conducted directly on the user’s device, ensuring data privacy.

B2B Monetization Model

Neatsy’s B2B model centers around SDK usage fees, calculated based on the number of users – a price is set per Monthly Active User. This approach allows e-tailers to benefit from improved fit accuracy.

Impact on Return Rates and ARPU

The company asserts that its technology can reduce shoe return rates by an average of 39% for online retailers. This is achieved by enabling shoppers to virtually determine the optimal shoe size, leading to a more informed purchase. Furthermore, Neatsy projects a 20% increase in Average Revenue Per User (ARPU), equating to an additional $0.50 per user monthly.

Current Traction and Revenue

Currently, Neatsy has secured contracts with two e-commerce marketplaces and fashion enterprises, generating an Annual Recurring Revenue (ARR) of $120,000 over the last year. Several pilot programs are also underway, with the potential to convert into additional paying customers.

Geographic Focus and Market Opportunities

“Our current paying clients are located in Europe, and we foresee significant opportunities for further expansion within European markets,” states Semyanov. “Germany, the U.K., and France are hubs for sportswear and fashion companies, as well as large online marketplaces, and also house numerous SMB shops and brands for whom we are developing an entry-level product.”

U.S. Market and Nike Fit

The company is also exploring the U.S. market, with several brands currently testing the technology without charge. Semyanov playfully references Nike’s previously announced Nike Fit app, which ultimately did not launch, stating, “We would be happy to assist them with our technology.”

Product Development Roadmap

Alongside expanding its customer base, Neatsy intends to utilize the seed funding to enhance its product development efforts. This includes broadening the range of supported footwear to encompass formal shoes and children’s footwear.

AI Enhancements for Foot Condition Detection

The company is also working to refine its AI algorithms to identify specific foot conditions, such as flat feet and hyperpronation.

Platform Expansion to Web and Android

Plans are in motion to launch versions of the technology for web browsers and the Android operating system, as 3D depth cameras are becoming increasingly prevalent in Android smartphones, like Samsung’s DepthVision technology.

Strengthening Integration and Customer Support

The seed funding will also be allocated to streamlining the product integration process and establishing a dedicated customer success team, according to Semyanov.

Potential Applications in Orthopaedics

Neatsy’s interest in orthopaedic applications arose after receiving inquiries from the NFL’s San Francisco 49ers regarding the potential for assessing pronation and supination in new players. “They were interested in whether we could test for pronation and supination, as it’s extremely important for future players. Pronation is a major factor in injuries in running sports,” explains Semyanov.

Detecting Pronation and Supination

“We were unable to help the SF 49ers at the time, and hadn’t considered this feature before. After testing and research, we determined that it was achievable,” he says. “By viewing the feet from the side, pronation or supination can be identified, and our camera-based depth and distance measurements allow us to train the algorithm to recognize these conditions.”

Future Developments and Orthopaedist Consultation

“This will undoubtedly be a key area of development for Neatsy’s product,” Semyanov adds. “We are currently consulting with orthopaedists, and it appears this is a significant issue not only for professional athletes but for the general population.”

Digital Health and Camera-Based Tracking

The use of smartphone cameras is driving innovation in the digital health sector, with numerous startups focusing on camera-based tracking for musculoskeletal disorders, such as Kaia Health.

Expanding to Specialist Equipment

Looking ahead, Neatsy.ai is considering expanding its fit recommendations to specialist equipment, like ski and snowboard gear, given the high cost and potential for sizing errors.

Focus on Children’s Footwear

In the short term, the primary focus will be on adding fit recommendations for children’s shoes, as accurate sizing can be particularly challenging for growing feet.

Beyond Footwear: 3D Scanning for Retail

Neatsy also envisions broader e-commerce applications for its 3D scanning technology, potentially extending beyond footwear.

The Future of Sizing

“I believe that in the future, traditional sizes and size charts will become obsolete, replaced by ‘Your Size’ for each customer,” concludes Semyanov. “With our algorithm, this will become a reality for shoes, and we will explore whether it can be applied to clothing and eyewear as well.”