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Tokyo-based Pathee, the Japanese service behind a locality directory service under the same name, announced that it raised 650 million yen (around $5.8M US) on Tuesday. The exact round is not known, but it can be regarded as the post-series A round. Mitsui & Co., Eight Roads Ventures Japan, Regional Revitalization Solution, Dai-ichi Kangyo Credit Cooperative, Seqvel, and SMBC Venture Capital all participated this round. For Pathee, it follows the series A round (300 million yen raised) held in June of 2017 (the company name at this time was Trietrue). The total amount released publicly of funds raised thus far is 1.1 billion yen (about $9.7M US).

Pathee got its start as a search engine for locality information. Some of our readers may recall that we introduced the company as a finalist in the Innovation Weekend Grand Finale 2013 nearly five years ago. When a user wants to purchase a product or avail of a service from nearby, it is difficult unless they already have a shop name in mind or a clearly defined basic product, even using the popular engines. It is common for restaurants and bars to have some sort of website, but the same does not hold true for other small businesses, and even with search engine crawling the information is unattainable.

Setting their sights on this, the company released Pathee Partner in April of this year. The service specializes in small stores apart from eating and drinking establishments and, as an alternative to a store website, it makes creating primary information easy. It is designed to not only catch searches on Pathee, but also through the crawling of other search engines. The introduction pages of retail businesses using Pathee Partner appear in the top five after searching for related products and store names, which in turn leads the customer to the retailer’s store.

Pathee CEO Shinsuke Terada explained:

Instead of going to a store and then searching for a product, more and more people are going to the shop after searching for the merchandise. We made it so people don’t have to use the keyword ‘sports shop’ to search for one, but instead search for the products they want or their objective for going. Search results should only consist of products made by Pathee Partner, and we are thinking about making an app once recognition increases to a certain degree.

While startups supporting diners and restaurants are fiercely competing each other, the vertical of those helping other retail businesses market are still seeking a clear monetization where many opportunities remain untouched according to Terada.

In view of how to make money from helping dining businesses, it would be possible to do so by driving customers to them (from online to offline). However, nor would it for other retail businesses because it would be harder to determine how much online efforts could contribute to their sales result.

That’s why we decided to serve in the form of SaaS (software as a service) so that we can easily make retailers pay for our service. While Amazon sweeps the world of online commerce, when physical stores use Pathee Partner we have created a direct line to connect them to the customers they are looking for.”

Since Pathee’s search results had no function to display retail store details, Pathee Partner came as a byproduct positioned to fill the gap. Since its release six months ago, the pull of the service has been very good. The company counts many chain stores as customers, and all one needs to do to collect all the pages of all stores at once is talk with the headquarters in Tokyo. That’s business efficiency.

Pathee Partner has functions that allow physical stores to manage all their digital marketing measures at once, such as simple content creation, managing social networking accounts and posts, traffic analysis, and so on. Pathee aims to use the funds raised this time around to improve the sales organization of Pathee Partner, and plans to further expand Pathee Partner’s company users, which now total 60.

Reading up to this point, some readers may be under the impression that Pathee has completely pivoted to a digital marketing startup for retailers, but this is actually not the case. The company, which can already give a return on a user’s original search, will continue to sharpen its technology that reconstructs locality information semantically (For example, with respect to the keyword “Shinjuku”, Pathee’s engine can determine whether the user means “Shinjuku station” or “Shinjuku neighborhood”). Terada related that he wants to focus on improving the accuracy of the search engine technology while strengthening the financial bases of its administration by expanding sales of Pathee Partner.

Translated by Amanda Imasaka
Edited by Masaru Ikeda