OneText raises $4.5M from Y Combinator, Khosla to reinvent shopping by text
OneText, an innovative company spearheaded by former PayPal employees, has successfully closed a $4.5 million seed funding round. The substantial investment, backed by notable firms including Y Combinator, Khosla Ventures, Coatue, Citi Ventures, and Good Friends—a fund established by the founders of Warby Parker, Allbirds, and Harry’s—along with musician Matt Bellamy from Muse, is set to propel OneText’s groundbreaking “text-to-buy network” initiative.
The core mission of OneText is to redefine the often-cumbersome online checkout experience. In an era where digital commerce is rife with friction points, OneText offers a revolutionary solution: empowering shoppers to complete purchases effortlessly via a simple text message. This approach cleverly circumvents a significant challenge faced by many payment solutions, as identified by co-founder and CEO Jonathan Fudem during his tenure on PayPal’s checkout team: the difficulty of convincing merchants to disrupt their existing, often platform-dictated, payment flows.
By leveraging SMS, OneText removes the need for merchants to replace their website’s established checkout systems. While large social platforms like Instagram and WhatsApp have ventured into e-commerce, OneText emphasizes the importance of brands maintaining direct, proprietary relationships with their customer base.
OneText distinguishes itself from conventional SMS marketing companies, which are often associated with mass, impersonal messaging and spammy links. Instead, OneText employs a sophisticated blend of AI-powered two-way conversations and human oversight to create a personalized and highly effective communication channel. This intelligent system has proven to enhance conversion rates by an impressive 20% to 30%, driven by features such as intelligent cart recovery, strategic post-purchase upsells, and tailored shopper-specific recommendations.
Underpinning its seamless operation, OneText utilizes its own secure wallet that integrates with a brand’s existing payment processor. After a customer’s initial purchase, their payment information is securely vaulted. This “card-on-file” setup allows for subsequent reorders to be completed with just a single text reply, mimicking the convenience of “charging items to a room” during a hotel stay. To ensure transparency and customer autonomy, OneText implements “consentful automation,” wherein reorder payments are scheduled to process after 24 hours unless the customer opts to cancel, providing an opt-out by default mechanism.
Looking ahead, OneText envisions expanding its network to allow shoppers to utilize their vaulted profiles across multiple brands. This ambitious goal aims to provide prefilled checkout data and even smarter, cross-brand recommendations, ultimately building towards a pervasive, SMS-native payment network. “Building a consumer-facing wallet that’s 10x better is really hard,” stated Fudem. “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.”
Having emerged from the Y Combinator 2023 cohort, OneText, co-founded by Jonathan Fudem and CTO Daniel Brain, has been quietly developing its platform. The company now boasts a growing client base that includes midsized e-commerce brands with annual revenues ranging from $10 million to $100 million, alongside support for both nascent startups and large enterprises. Fudem confirms robust growth, reporting that the company has been scaling 3x year over year and generating millions in revenue.
