Founder Profile: Donations Made Easy With Johnny Li, Co-Founder And COO of Parvenu

Patrick is an experienced fundraiser and I came from a technology consulting background. Patrick learned important fundamentals to effective fundraising at his previous job, and when he saw that charity checkout does not employ good fundraising principles he saw the potential to build a new technology.

We were both professional gamers and met while touring the country playing tournaments. We’ve always worked well together in tournament preparation, and decided it was time to take our strategic talents to building a company.

We’re helping storefront retailers build a brand that lets them compete with other branding initiatives like AmazonSmile. Businesses want their customers to know that they care about their communities. With a personalized giving platform, we’re helping retailers connect to their shoppers and build brand loyalty while differentiating their image from the competition.

Our pilot testing raised the donation rate from the 8% national average to 25%. At 3x the donation rate, we would be looking at a market size that is over $1.2B in donations and $120M+ annual in revenue. However, that’s assuming that all we’re trying to do is improve existing charity checkout – but that isn’t the case. Traditional charity checkout isn’t growth-focused because it does not exist as a for-profit business.

We are setting out to create a paradigm shift; by bringing our platform to retailers who do not typically use charity checkout, we can change the culture around giving and make giving at the checkout counter more of a norm. By penetrating into space beyond where charity checkout exists to include everywhere there are transactions, we’ll go way beyond a $1.2B capturable market.

Grocery stores alone see over $600B in revenue / 20B+ individual transactions annual in the U.S., each of which is an opportunity to present the donation ask. Total retail sales in the U.S. is projected to be $5.48T in 2020.

We will use a data driven approach to present shoppers the causes they actually care about. This will begin with the shopper’s invoice. If they’re buying dog food, then it makes more sense to show them an animal shelter local to their area than a cause they are unfamiliar with from some far away region.

he dog food = animal shelter personalization is straightforward enough, but this is not always the case. This is where AI shines. Machine learning means that we don’t have to try and guess what each type of shopper wants to give to. AI can study donation habits and craft the appropriate ask over time for maximum value, both in terms of how often the shopper says Yes to donating, as well as the donation amount that best fits the shopper.

We worked with five small businesses across Texas and ran a pilot program for one month at these locations. We saw a 25% donation rate of $1 per transaction sustained over the entire campaign. The national average is only a third of that at 8%. What’s more exciting is that all we did in this pilot test was try out cosmetic improvements to the design. Once we complete our crowdfunding, we will develop more sophisticated features that I anticipate can take donation rates up to 50% and beyond, depending on the store.

We will work with retailers when selecting non-profits, especially when they already have existing relationships that they want to nurture. Our goal is to enhance their charity efforts through intelligent tools, not to replace them or to oust any of the non-profits they’re already working with.

Apart from that, we’ve found the non-profit partnership side of the business pretty easy to work through, simply by virtue of few non-profits would have a compelling reason to turn down a new stream of revenue that comes at no cost to them. That’s one of the elegant aspects of our business model; we tear down the high up front costs that smaller charities often struggle with when it comes to fundraising projects.

Since our technology is at the intersection of multiple business sectors, our partnerships span multiple sector as well. We have partnerships in payment technology, in cloud computing, in the charity sphere, in technology distribution, in social enterprise, and in retail.

One of our most important partnerships is with Verifone, since their payment terminals dominate the domestic market. You can scarcely walk a few blocks in any direction without running into their terminals, so partnering with them in order to do development into their terminals has been key. Recently we received a $120,000 technology grant from IBM upon being accepted into their Global Entrepreneur program.

The top sales channels that we are exploring include warm introductions through smaller companies that have been acquired by major retailers, pursuing major retailers who have expressed an openness to technology acquisitions (such as Macy’s), going through distributors who can implement our platform en masse, and going through existing relationships.

Our revenue model charges a transaction fee from the donation rather than an implementation fee to the retailer. By taking this approach, we are keeping the barrier to entry as low as possible so that retailers will want to adopt our technology. If we do face challenges, we can also test models such as sharing a small (1-2%) kickback from transaction fees with retailers.

Like Airbnb and Uber and pretty much any “paradigm-shift” startup we’ve seen permeate culture over the years, we anticipate that it will take a change in society’s frame of thinking in order to reach critical mass. People didn’t start staying in stranger’s homes or riding in stranger’s cars on a wide scale until society changed the way they thought about sharing their homes and their vehicles.

Similarly, it’s going to take a change in the culture of giving for us to penetrate on a grand level. However, in the immediate future, we just want to sell into as many stores as possible, and as I’ve mentioned before, working with the retailer on their existing non-profit relationships as well as making the platform free to retailers will be critical to a successful early launch.

Full-on personalization doesn’t take place overnight; perhaps 1 charity will be the starting point for some reluctant retailers, and over time, in-store data can show them that more personalized giving is boosting their customer retention.

The starting metric is simply to track donation rates. The further we go past the national average of 8%, the better the indication that we are breaking the charity checkout game. In the long term, number of store implementations per unit of time will be another top metric.

Implementing into one store at a time might be understandable in the first few months, but if we aren’t capturing multiple locations per deal at the one-year mark, then that will be a red flag. Our platform is inherently scalable by virtue of being a digital product that exists wherever there are transactions. Naturally, we expect for the implementation rate to be explosive over the next couple of years.

Thanks to the partnership with IBM, much of the technology costs that would have eaten up our equity crowdfund capital are now taken care of. This means we can aggressively put the capital we raise into personnel, marketing, development, legal, and all the things that will drive us toward an earlier and more ambitious initial launch.

With visions for disrupting the old model of point of sale giving, Parvenu may be onto something really big that can drive corporate profits for major corporations while doing good.