February 21, 2024


lucaa startup building price planning and forecasting tools for retailers, today announced the closing of a $2.5 million seed round led by Menlo Ventures, with participation from Y Combinator (Luca attended Y Combinator’s Winter 2023 class), Soma Capital and angel investors round of financing.

Luca was co-founded by Tanvi Surti and Yonah Mann, who previously worked on Uber’s dynamic pricing team. Mann focused on pricing for Uber Eats, while Surti led the UberPool pricing group.

“When I was on the Pool team in 2019, the company had poor unit economics,” Mann told TechCrunch in an email interview. “Uber was on the verge of an IPO, and I was tasked with making unit economics work by reconfiguring Uber Pool’s pricing algorithm. Within ten months, we had successfully used pricing technology to plug a huge hole in Uber’s P&L. Let’s start thinking.”

Mann describes Luca as “the pricing co-pilot for enterprise retailers.” In plain English, it’s a platform that uses artificial intelligence to determine revenue and profit margins, recommend price adjustments, and measure the results.

“Pricing strategy is one of the most powerful levers a retailer has to generate profit and revenue growth, yet most retail pricing teams tend to shoot in the dark,” Mann said. “Retail pricing teams must combine vast amounts of data from multiple channels to develop strategies—sales history, market trends, competitor price changes, and inventory availability. They must execute this across tens of thousands of SKUs and multiple stakeholders. operate.”

This need—and the large addressable market—sowed the seeds for many pricing optimization and planning startups. Pricefx is one of the most successful providers, having raised tens of millions of dollars for its algorithmic pricing software designed for software-as-a-service businesses. Fetcherr, which specializes in pricing adjustments for the airline industry, recently raised $12.5 million in equity funding.

luca

Luca’s platform attempts to use historical data and other signals to optimize retail prices. Image credits: luca

On the face of it, Luca’s differentiator lies in its pricing engine, which ingests historical sales and inventory data from retailers, as well as signals from competitors, to predict sales performance for products at different price points. Once its pricing proposals are approved, Luca keeps a close eye on sales, looking for bad trends.

“Unlike some of the other players in this space, we’re not a dynamic pricing company. We just don’t think that’s the right user experience for retail,” Mann said. “Our solution is complementary to human decision makers, and we aim to provide humans with decision-making superpowers by turning vast amounts of data into clear recommendations with a high degree of interpretability.”

It’s still early days for Luca in terms of customer acquisition — the startup has only worked with eight brands so far. But Mann claims two of the brands are Fortune 500 retailers.

“In the wake of the pandemic, most retailers are feeling growth and margin pressures due to higher customer acquisition costs, reduced consumer spending and rising interest rates,” Mann said. “Most retail software-as-a-service tools rarely directly impact business metrics, and the retail executives we interviewed were actively looking for revenue optimization opportunities…that’s where we come in—our solutions create immediate and measurable commercial value.”

The seed funding will be used to expand Luca’s engineering and data science teams, he added.