In 2020, Kathryn Wu launched a side hustle while working as a product engineer at Pinterest. She founded OhTea, a milk tea company, aiming to partner with local grocery stores and gift shops for distribution. However, Wu quickly encountered challenges in identifying potential retailers and their key contacts. The complex and fragmented retail landscape ultimately contributed to the company's downfall. “I failed to reach product-market fit,” Wu shared. “Finding retail information was incredibly difficult. I had to compile large spreadsheets, and it sparked the idea that perhaps I should solve my own problem.”
This experience laid the groundwork for Openmart, the startup Wu co-founded three years later. Openmart positions itself as the AI-powered alternative to Zoominfo. The company leverages artificial intelligence to gather data from various public sources—such as business filings, maps, and customer reviews—to create a comprehensive database of local businesses categorized by type. Users can easily specify the type of businesses they want to target, and Openmart provides a list of potential sales leads, complete with business owners' names and contact details.
Wu co-founded Openmart with Richard He, whom she met during her internship at Pinterest. Their bond grew within an Asian entrepreneurship community, and they discovered common ground through their pets: Wu has a golden retriever, while He has a lab. When He learned Wu was considering launching a startup, he jumped at the chance to join her.
Though Wu’s initial struggle with OhTea stemmed from issues accessing local businesses, the mission of Openmart evolved. He explained that their research revealed larger enterprises also faced challenges when selling to local businesses, leading them to focus on creating solutions for that demographic. “Our main focus remains local businesses,” He affirmed, referring to the types of businesses included in Openmart’s database. “We recognize this as a significant pain point. Our AI agent is poised to enhance outbound sales as we branch out to various sectors beyond just physical businesses. In the initial wave, AI isn't about replacing high-level roles like lawyers or doctors; it’s more about automating lower-complexity tasks.”
Founded late last year, Openmart participated in Y Combinator's W24 cohort and gained several trial customers during its beta phase, ranging from Fortune 500 firms to Series B and C startups. Notably, fellow Y Combinator founders became some of their first clients. Wu indicated that their strategy focuses on generating leads for enterprise clients initially, with plans to cater to medium-sized enterprises in the future.
Openmart recently secured a $2.75 million seed funding round and is transitioning out of beta mode. The startup attracted investment from Y Combinator, Rebel Fund, Afore Capital, and several other venture capital firms. He emphasized their strategic fundraising approach, which involved setting a realistic funding goal and rebuffing offers to raise beyond their intended target. He mentioned that the company follows advice from their Y Combinator partner, Gustaf Alstromer, aiming to maintain 50% ownership through their Series B round. “It’s a straightforward math challenge,” He explained. “The goal is to minimize dilution. We only want to raise enough capital to sustain us until the next funding round, basing our needs on bottom-up calculations rather than simply seeking to maximize our funding."
He also pointed out that the efficiency of their engineering team, aided by AI, reduces the need for extensive hiring, allowing them to focus on a smaller, more productive group.
At present, Openmart is committed to aggregating local business data but has plans to explore other avenues down the line, according to He. While many startups consider horizontal expansion, targeting new verticals or business categories, the company intends to carefully evaluate potential areas. Some markets, such as B2B software, already have established players in sales lead generation, including LinkedIn Sales Navigator and Crunchbase.
Despite intentions to expand in the future, both Wu and He are dedicated to their foundational goal: supporting small businesses. They aspire to be recognized as experts in identifying contacts for small and medium-sized enterprises.
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