Four years after it was founded, the research firm L2 has taken its first outside investment, a $16.5 million raise from the venture capital firm General Catalyst, VentureBeat first reported Wednesday. Although it's looking to expand the categories that it covers, L2 works primarily with the fashion, beauty and travel industries, aggregating and analyzing data on brands' digital footprints.
By providing brands subscription-based business intelligence, L2 essentially competes with the traditional consultancy industry. Companies often have an idea of what is working for them online, Galloway says, but few have any hard data on their digital presence across the web, mobile and social media. And they're hungry for the information that L2 can provide them -- particularly on how they stack up against their competitors.
Fashion groups and beauty companies like LVMH and L'Oreal use L2 to see where they're under and over-performing relative to their competitors, and the research firm gives them recommendations on how best to accomplish their goals. If a brand wants to increase its digital presence in China, L2 can provide a roadmap for how best to do that.
The General Catalyst investment will be used to increase L2's research capabilities and add staff to its 35-person team, particularly in Europe, Asia and on the west coast. L2 has been gathering a massive amount of data over the last four years, CEO Scott Galloway says, and that process needs to be more efficient.
"Right now it takes 12 weeks to collect data [for our reports]," he says. "We want to reduce it to two to three weeks."
Galloway also wants to expand the geographic reach of L2's research. It currently covers 1,000 brands in seven markets; the aim is to increase that to 5,000 brands across 12 to 15 markets. Since each market needs to be measured differently, the company needs to develop different ranking systems for each.
L2 looks at a lot of data points to determine a brand's online presence -- about 850 of them. While many brands don't have the funds or resources to be excellent across the board, some have done an exceptional job of nailing most aspects of their online experience, Galloway says. Tory Burch, Kate Spade, Sephora, Coach and Estee Lauder tend to be universally strong, although there's always room for improvement.
Interestingly, LVMH's brands aren't uniformly good on digital -- some portfolio companies like Sephora and Louis Vuitton are outstanding at digital while others are pretty awful -- whereas Kering's scores tend to be higher than other fashion conglomerates. It seems that some of their activities are being centralized, Galloway says, while LVMH's might not be.