Target Techstars graduate Branch Messenger expanding with $6.8 million round of funding

Atif Siddiqi traded in the California surf to move his young tech company to the Twin Cities last year, drawn by his budding relationships with the area's Fortune 500 companies, including Target Corp.

The bet seems to be paying off — and for more reasons than it's liberated him and his team from wasting time every day battling Los Angeles traffic.

Branch Messenger — which has a mobile app that digitizes paper schedules and allows hourly workers to more easily swap shifts with one another — just closed a $6.8 million Series A funding round, bringing its total funding to more than $10 million. The round was led by Santa Monica-based March Capital Partners but also included Twin Cities firms and investors such as Matchstick Ventures.

In terms of capital raised, that makes Branch Messenger the most successful to date among the 10 start-ups that participated last year in the inaugural class of Target's Techstars retail accelerator, a three-month boot camp at the retailer's Minneapolis headquarters.

Another of the companies, Inspectorio, also moved to Minneapolis and raised $3.7 million in a seed round of funding that was led by Target.

Siddiqi, 35, launched Branch Messenger in Los Angeles in 2015. With the extra resources in hand, he's now planning to double his workforce, which has already grown from three people to 20 in the past year. And he's looking for more permanent office space in downtown Minneapolis after working the last several months out of the Industrious co-working space in RBC Plaza.

"We're excited as the team is growing to find a place that will be a home we can grow into downtown," he said. "It's great to see a lot of activity downtown … and to see the city and builders receptive to start-ups like us coming in."

As he grows his team, Siddiqi is also now looking to sign up more big company customers. His app started off with a more bottom-up approach in which employees or store managers used (and still can) the app for free. That approach brought organic growth, and Branch now has tens of thousands of active users that include a number of individual Walgreens or Domino's locations.

But his time in the Techstars program validated his idea that large companies would be willing to pay for the service. So he's now working to integrate it into companies' legacy systems as a way to get added analytics, reduce absenteeism, save managers' time and save on payroll costs.

"Large companies like Target have the same problems [as smaller firms] with their hourly workforce when it comes to scheduling changes, when it comes to management communication to front-line employees at scale," he said. "The complexity is even greater because you have hundreds of thousands of employees."

Branch Messenger is also now broadening its initial focus from retail stores to factories, distribution centers, call centers and banks. With Target, it has expanded a small pilot at a handful of stores to more than 130 stores plus call centers and distribution centers across the chain. It also has been running tests with Chanhassen-based Life Time and other undisclosed Fortune 500 companies.

The Twin Cities has another player in this space, When I Work, which is also adding to its workforce and relocated its headquarters to the North Loop from St. Paul last year after raising $15 million in venture capital funding.

Since moving to Minneapolis, Branch's Siddiqi has been pleased by the deep talent pool in the Twin Cities, which he's supplemented by recruiting from Midwestern schools such as the University of Michigan and Purdue University.

"For a B2B software company, I couldn't think of a better place to be, honestly," he said. "You have the talent that understands enterprise sales. And a lot of Fortune 500 companies are headquartered here who are potential clients."

He has recruited Jason Martin, formerly of Leadpages, to be Branch Messenger's director of growth, and Andrew Johnson from Dialpad to be its director of sales. And Taylor Pack, who worked with Branch Messenger during Techstars while he was still with Target, has come on board as its vice president of customer development.

All in all, Siddiqi said Minneapolis has been a good place to grow a young company.

"I do miss the occasional surf, but I was a really bad surfer," he quipped. "So it probably was for the better."

And now, he's a mentor for the second class of Target's Techstars program. A new crop of 10 start-ups, including two local companies, got going last month.

"My goal is to get another one to stay," said Siddiqi.

Kavita Kumar • 612-673-4113