OneText, a startup that aims to improve the online checkout process by building a “text-to-buy network,” has raised $4.5 million in seed funding. This company, which was founded by former Paypal employees, just closed a seed round backed by Khosla Ventures, Coatue, Citi Ventures, Y Combinator, Good Friends, and Matt Bellamy — the frontman of Muse.
Co-founder and CEO Jonathan Fudem said he came up with the idea while working on the checkout team at PayPal. There, he saw the struggle to convince merchants to swap out existing merchant flows. “That’s a hard pitch,” Fudem said, adding that many merchants don’t even have the freedom to choose their checkout provider; it’s often decided by their e-commerce platform. OneText solves this problem by using SMS.
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OneText sees itself as a competitor to other SMS-based marketing companies, which are known for their mass, impersonal messaging and spammy links. In order to improve conversion rate, it uses a combination of tools including AI-powered two-way conversations and humans in the loop. Its notable features include cart recovery, post-purchase upsells, and shopper-specific recommendations.
OneText runs its own wallet, which integrates with a brand’s existing processor to complete transactions. OneText securely vaults a customer’s payment information after their first purchase. From then on, they can reorder with a single reply. The platform also has a “card on file” setup that makes its text commerce similar to charging items to a room during a hotel stay.
OneText makes use of what Fudem refers to as “consentful” automation. If a brand wants to charge a customer for a reorder, OneText sends a text saying the payment will go through in 24 hours unless the customer cancels. It’s opt-out by default.
“Building a consumer-facing wallet that’s 10x better is really hard,” Fudem said. “But we can create a business-to-consumer texting platform that brings the ‘charge it to your room’ experience, only now, it’s your phone number. That’s how we’ll build the network.”
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OneText went through Y Combinator in 2023, and in its first year, the company onboarded 50 fast-growing e-commerce brands and added as much as 14% in incremental revenue to their bottom lines. Fudem founded the company with CTO Daniel Brain, whom he met at Paypal.
Fudem says that today the platform has midsized e-commerce brands obtaining $10 million to $100 million in annual revenue as customers, though it also supports smaller startups and large enterprises. “We’ve been scaling 3x year over year and doing millions in revenue,” Fudem said.
Khosla Ventures and Y Combinator also recently backed Onyx, a startup planning to redefine AI enterprise search. Onyx managed to secure $10 million in funding from these companies and others. Notably, Khosla has also previously invested in OpenAI.