🦄 Unicorner Startup of the Week: Butter
 
Christina Lennox (left) and James Stallworth (right) pose for the camera in October 2022 | Photo by Arek Der-Sarkissian
 
✍️ Notes From The Editors
 
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Recovering lost subscription revenue
 
 
Butter is helping companies reverse and reduce accidental payment churn—in other words, it’s recovering customers whose subscriptions have been accidentally canceled for a variety of reasons. The company uses patented machine learning models to analyze factors surrounding an individual’s subscription and cancellation, such as the payment method, geography, and the error that caused a payment failure. From there, Butter’s technology can determine how to recover the payment and retry the subscription charge.
 
 
🔗 Check it out: butterpayments.com
 
 
💰 Business Model
Butter runs on a revenue share model, where the company takes a percentage, usually 10%, of revenue that would have otherwise been lost without its services.
 
📈 Traction and Fundraising
  • Raised $22 million Series A from Norwest Venture Partners, Atomic, Spring Tide Capital, and Transpose Platform
  • Reported $6 million in revenue in 2022
  • Per website, estimates $20 million to $30 million recovery in subscription fees is possible for a company making $500 million in revenue
 
👫 Founders
  • Vijay Menon, CEO: Previously Product @ Scribd, Product @ Dropbox, Product @ Microsoft, Economics and Statistics @ Duke
 
💼 Opportunities
 
🔮 Our Analysis
According to Butter’s website, over 3 billion people worldwide have lost access to services they wanted to use due to accidental subscription cancellations. It amounts to more than $443 billion in lost revenue a year. Butter’s CEO Vijay Menon first began to recognize this problem through his roles at Microsoft, Dropbox, and Scribd. A lot of his time was spent working to eliminate accidental cancellations, like ones that occur due to payment failures and incorrectly configured cancellation flows. It doesn’t sound like it should be a big problem, but when a company’s revenue scales, so does the likelihood of these cancellations. The impact on revenue can mean losing millions of dollars from otherwise satisfied customers. While some customers might take initiative to try and resubscribe, this isn’t always the case, and frustration can drive users to competitors. Butter is designed to fit seamlessly into a company’s payment flow. It offers a number of no-code integrations with payment providers, and it does its payment analysis quietly in the background. If a payment fails, it checks a variety of factors around the failure before deciding how to handle it best. On average, Butter claims to increase ARR by 5% through its payment fixes. It may seem simple, but the numbers are promising.
 
📚 Further Reading
 
 
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