Scrunch AI: Gen-AI Optimization for the Post-SEO Era 🔍🤖

(4 minutes)

Hey 👋, this is the Kitsune VC Newsletter: A subset of Today in AI, where we vest a $10 million early stage fund over the next 2 years.

We make “investments” every week into early stage startups we think will make it big in hopes to beat the returns of big funds like Sequoia and a16z. 💸

Today we are talking about a company that is first to a space that will soon replace the $68B SEO industry. 📉

The Problem: AI Search Is Rewriting the Rules of Customer Acquisition 🧠

Traditional search is dying. AI chatbots and search engines are projected to reach a 7.6% share of the global search market by 2025. This is even higher for Gen Z, at 31% of their search. 📉

Personally, I see traditional search sitting at around 40% of global search volumes where users utilise it for accessing their favourite websites and static searches.

But dynamic questions?

It will all shift to AI-driven search  -  with Gen Z and tech bros taking the lead in adoption. 💬

And because of this, the traditional SEO market is collapsing. When more and more search happens on generative AI tools, optimising to rank high on Google doesn’t cut the cake for brands anymore. ❌🍰

AI search platforms like ChatGPT, Perplexity, and Meta AI now answer user queries with synthesized responses drawn from multiple sources, often without linking to original websites. 🤖🔗

Early data shows:

• ✅ 68% of users trust AI answers over traditional search results
  

• ❌ 42% of enterprises report inaccuracies in how AI represents their offerings

The Solution: Generative AI Optimisation Tools 🚀

This is where Scrunch AI comes in. It provides three key value propositions:

1. 🧭 AI Search Monitoring: Real-time tracking of how brands appear across 15+ different AI platforms

2.  🛠️ Technical Checks: Automatic scans to ensure compatibility and that AI web crawlers aren’t being blocked

3. 📝 Content Suggestions: Recommendations to optimise your pages - including meta tags and structure

4. 📊 Competitive Benchmarking: See how VisaWire’s presence compares to competitors in AI-generated responses

It also provides integrations with CMS platforms like WordPress and Contentful, and with LLM fine-tuning tools to align AI responses with brand messaging. 🤝

Founders 👥

The founding team have exceptional backgrounds - and the quality of their product (and traction) speaks for itself.

• 👨‍💼 Chris Andrew (CEO): First employee and CPO at Hearsay Systems (acquired by Yext in 2022); scaled it from $0 to $75M+ ARR
  

• 👨‍💻 Robert MacCloy (CTO): Early engineer at Quantcast (peak $400M revenue) and CTO at Hearsay; built infra supporting 10B+ monthly API calls
  

• 🧠 Advisors: Clara Shih (Meta AI, ex-Salesforce) and TJ Parker (PillPack founder, $1B exit to Amazon)

Who wouldn’t want to back founders that have exited together? 💪

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Investment Rationale 💭

This was the most exciting Kitsune investment for me by far. I spent the weekend thinking about what start-ups I think are no brainers - and what I would include in my personal request for startups. 🧠✨

This was the first thing that came to mind. But the next question was:

“How do I determine which tool is the best product, without paying for them all?”

🧪 Simple - I tested AI search engines by describing what I was looking for and from this, found 10 startups to research.

I was looking for:

• 🚀 Early & fast movers

• 🧱 Defensible tech

• 🧠 Talented founders
  

With Scrunch, I found this and more. ✅

The founders have protected their crawler network and optimisation algorithms with two pending patents and previously were acquired by Yext, a giant in the SEO tools space.

That experience clearly gave them the insight that a new wave is coming - and I think they’re right. 🌊

📈 The traction? Wild.

They’ve signed 25 enterprise customers in 3 months, including Lenovo, Crunchbase, and Penn State, with average contract values of $120K.

Deal Structure 💰

The team has just raised a $4M seed round, which we’ll assume was at a $20M valuation led by Mayfield Ventures.

This is one of the strongest pulls that a start-up has had on me so far - I'm joining with a $750,000 cheque, taking a theoretical 3.75% stake in Scrunch AI.

Just to clarify once more, none of the investments we make as part of Kitsune VC are real - we’re only simulating what investments we’d make if we operated such a fund. 

This is NOT financial advice. ⚠️

Wail’s view🥊

I’ve got to say, Preet has taken a bold bet with this startup; this is the single largest check we’ve written to a startup so far and it comes with no surprise. 💰

Scrunch AI has clear traction, growing to over $3 million in revenue just 3 months from launch. 💸From what I’ve seen they also have a first mover advantage in this market.

The real question is: Will their revenue stick?

Countless AI startups like 11x have initially grown at incredible paces in the last year, but churn is now eating them ALIVE. 🔥

Businesses try the product once and never go back…

The founders’ impressive experiences building and growing Hearsay Systems however, should have taught them enough lessons that this shouldn’t be an issue. 🏛️

What do you think of this phenomenon? 🤔

Before you go 👋 

Thank you for reading.

So far we’ve invested in 5 startups and have vested $2.25 million of our $10 million fund.

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