In 2020, Kathryn Wu was a product engineer at Pinterest. She started a side hustle. Wu founded a milk tea company called OhTea, hoping to connect with local grocery stores and gift shops to carry the tea. She soon learns how difficult it is not only to identify all the possible retailers but also getting an actual point of contact at every location. The diversified market was so confusingly complicated that it has become part and parcel of the company's downfall.

"I just did not get to product market fit," Wu told TechCrunch. "It's just very hard to find that retail information. I needed to pull from several tools, pull up a big spreadsheet and I thought maybe I should just solve my own pain point."

That experience became the basis for the startup she co-founded three years later, Openmart. Openmart calls itself the AI alternative to Zoominfo. The company uses AI to scrape data from public business filings, maps, customer reviews and other sources to aggregate a database of local businesses organized by type. Users give Openmart a prompt of what kinds of businesses they are looking to sell to, and the startup pulls them a list of potential sales leads with details like each business owners' name and contact information.

Wu co-founded the startup with Richard He. They met at Pinterest as an intern, then reconnected with one another in an Asian entrepreneurship community. It's a bond over their dogs: Wu has a golden retriever, and He has a lab. He wanted in when he saw that Wu was thinking of starting a company.

While the initial concept was born out of Wu's inability to get his small side-hustle business into local business, the ensuing mission behind Openmart looked a little different. He said they were doing research into this idea and discovered that large enterprises struggled to navigate selling to local businesses too and decided to focus on building a product for that group first.

Our core focus is still local business, he said, on the businesses Openmart's database covers. We know it is a huge pain point. We are confident this AI agent can generate to all outbound sales as we grow into more sectors, not just physical business. AI in the first wave is not replacing lawyers or doctors, it's more replacing lower intelligence, lower logical orders of reasoning tasks.

The company was founded late last year and was part of Y Combinator's W24 cohort. Openmart gained a small number of paying customer trials during beta that range from Fortune 500 companies to Series B and Series C startups. Their fellow YC founders were among their first customers. Wu said that his intent is to begin with this type of leads for enterprise clients first, and later down the line, create a tier for mid-sized enterprises.
Openmart has recently raised a seed round of $2.75 million and is coming out from its beta mode. The company has raised funds from investors like Y Combinator, Rebel Fund, Afore Capital among other VC firms. He said the company was cautious about setting a realistic fundraising target and refused investors who wanted them to increase an oversubscribed round. It's following in the footsteps of YC group partner Gustaf Alstromer's advice on this front -- trying to retain 50% ownership through Series B.

"It is really an easy math question," he said. "You want to dilute as little as you can. You only need to raise as much capital as you need to survive to the next round. How much money we need is a bottom-up calculation rather than I want as much money as possible."

He said that while AI helps engineers be more productive, they don't need as much capital for hiring them because they can instead focus on a leaner, more efficient engineering team.

Openmart is really focused on aggregating this data on local businesses to get going but plans to extend into other areas moving forward, he said. While it makes sense for most of the startups to expand horizontally or offer a similar service to a different vertical or business category, the company might be selective in the areas it chooses to enter. Some areas, such as B2B software, are pretty established with sales lead-generation software players like LinkedIn Sales Navigator and Crunchbase.

He said, "Even as the firm promises much enlargement in the future, they will yet concentrate upon their core: small businesses." Wu said that they want to be thought of as the experts at finding contacts for small and medium-sized businesses.