Luca, a business creating value specifications and prophecy instruments for retail outlets, declared today that it had obtained a $2.5 million seed round administered by Menlo Ventures coupled with involvement from Y Combinator (Luca was part of Y Combinator’s winter 2023 group), Soma Capital and private investors.
Tanvi Surti and Yonah Mann created Luca in collaboration. Yonah worked on the variable pricing program of Uber while Surti was the leader of the UberPool pricing division.
During my time in the Pool division of Uber during 2019, the business was not performing optimally from an economic standpoint, Mann informed TechCrunch via email. Preparing for their impending Initial Public Offering, my task was to rectify this problem by restructuring the pricing algorithm for Uber Pool. Over the course of ten months, we were triumphant in patching a huge gap in Uber’s finances through the use of pricing technology. This success caused us to contemplate other opportunities.
Mann portrays Luca as a “partner in pricing-related tasks for companies that sell products”. Put simply, it is a tool which incorporates Artificial Intelligence in order to discover potential income and financial benefit, propose changes to prices, and assess the impact of those modifications.
Mann emphasized the big role of pricing strategy when it comes to revenue and profit gain for retailers. To think of a strategy, pricing teams need to take consideration of different data, like sales history, market analysis, prices of competitors, and availability of stock. This is a complex process for such large merchants, as it involves dealing with numerous items and involved personnel.
There was quite a demand for services related to pricing optimization and planning, which motivated the creation of multiple startups. One of the most profitable of these has been Pricefx, which created highly-sophisticated software for computing software-as-a-service prices and has secured millions in capital. Similarly, Fetcherr, specialized for the airline industry and centered around readjusting prices, just recently closed an investment round worth $12.5 million.
Apparently, what makes Luca unique is its cost calculator which takes information about past sales and supplies plus signs from rivals to anticipate how well a product will sell at particular prices. After obtaining agreement with its pricing advice, Luca will stay alert for any unsatisfactory tendencies associated with sales amounts.
Mann stated that they are not a business that utilizes dynamic pricing and that they do not believe it is an ideal user experience for retail. Their objective is to provide people with the capability to make well-informed decisions by transforming an excess of data into suggestions that can be easily understood, with a high level of understandability.
Luca is just starting out with gaining customers and has only worked with eight brands so far, however Mann has mentioned that two of these brands are well-known Fortune 500 retailers.
Mann discussed the situation in retail post-pandemic, which sees retailers facing higher customer acquisition costs, increased interest rates, and a decrease in consumer expenses. Regular retail SaaS tools don’t offer ways to capitalize on this, which is why the interviewed retail executives find value in the solution provided, that shows direct profit.
Luca stated that the seed money will be used to develop their engineering and data science departments.