Accel And SV Angel Back...

Brands and businesses can track their reputations online and connect with consumers through social media. But what about in the real world? One of the biggest prizes in Startupland will go to whoever can figure out how to connect real-world shopping to brands and businesses. Steve Carpenter is going after that prize with his latest startup, Endorse . A lot of effort is going into trying to close the redemption loop from online offer to physical purchase in real-world stores. The daily deal sites like Groupon and LivingSocial are nibbling at this, as is Google Offers, Yelp and others. Most of those efforts focus on local commerce rather than big brand products you buy at national retailers, and that’s the nut Carpenter wants to crack. “If I look around, certainly Groupon created a new kind of incentive for local merchants, but nobody has modernized the coupon for the modern brand.” Carpenter has been incubating the company for a year as an entrepreneur-in-residence at Accel. (He sold his last company, Cake Financial, to Etrade in 2010 ). Endorse just raised $4.25 million in a Series A led by Accel, with SV Angel also investing (it fits into SV’s Online2Offline investment theme). His co-founders and team include early employees from YouTube and Paypal—co-founder and CTO Erik Klein, Mayrose Dunton (YouTube’s original head of product), and Franck Chastagnol (former lead engineer for YouTube ads). “The coupon turns 125 years old this year,” notes Carpenter. “It was designed by the first Coca Cola CEO—it was a free trial. The mechanism of the coupon hasn’t changed.” Endorse is trying to reinvent the coupon by rewarding shoppers (mostly networked Moms) for not only endorsing brands, but proving that they went out and bought the products. Carpenter tested out his concept in classic Lean Startup fashion. During a 3-month private beta trial, shoppers went to Endorse.com to pick the brands and products they liked, and then actually sent in their receipts for 10 percent cash back. Endorse sent them a Netflix-like mailer, and they stuffed it with receipts. Endorse set up a scanning process to scan the receipts and record their purchases. In addition to the cash back, brands could reward loyal customers with discounts for themselves and their friends. The results of this market test were fairly impressive. Endorse seeded the service with five women across the country. With no marketing, it spread to 15 thousand beta customers in three months (86 percent of them women in places like Indianapolis, North Carolina, and Sacramento). Just like Pinterest, Endorse kept this stealth by focussing on middle America. Those 15,000 customers turned in 150,000 receipts and made 1.5 million brand endorsements. By the time Carpenter ended the trial, the service was growing by 10,000 receipts a week. These numbers are small, but that’s the point. He and his team learned enough about their customers to start designing the real product, which will launch later this year. The real product will still include the Netflix for receipts, but there will also be a mobile app which will allow consumers to snap a photo of their receipts instead of mailing them in. Endorse tested this as well using just camera phones and email, and it was seeing a new proof of purchase pop in every 90 seconds over a period of 3 days. Endorse is trying to solve two problems: recognizing shoppers for product loyalty and giving brands product-level data currently unavailable to them. In addition to cash back, brands can use Endorse to craft other types of incentives, such as paying extra to get you to try a product. Or, if you are Oral B, you know that someone who buys a set of replacement heads for a spinning electric toothbrush is 90 percent likely to remain a lifelong customer. It might be worth it to reward that person $25 or even $50 for making that critical purchase. Or a loyal customer might get a nudge to influence her friends by letting her gift them a 30 percent discount. Endorse can also lead to buying circles. Each endorsement can be shared via the equivalent of an affiliate link for the real world, which then associates the new Endorse members to the person who referred them. For brands, it is all about the data. Most real-world retailers are stingy with the data they share with brands about who is buying their products. Web startups like Endorse see an opportunity in bypassing the retailers and simply connecting brands and consumers directly. But that is easier said than done. You might remember that previously social shopping startups such as the defunct Blippy  tried to get consumers to broadcast their credit card purchases on Twitter or Facebook with the intention to later pan in that stream for data nuggets. The challenge was that nobody really wanted to broadcast how much money they were spending, and even if they did, the data wasn’t at the product level, it was at the basket level. Endorse collects the actual receipts, with each product listed line-item by line-item. It’s a printout of the retailer’s cash register information, which Endorse then scans and redigitizes to put back into its own database. It is an inefficient process, but barring big retailers like Walmart and Target opening up their data warehouses to brands and startups (ain’t gonna happen), the physical receipt in the customer’s hands is the only way to reassemble that data. It’s somewhat of a hack, but if Endorse makes it easy enough it could have a business. All it is doing, if you think about it, is liberating data. There is a lot of money to made from doing that these days.

Citi Backs Gift Card Ex...

Plastic Jungle , which operates an online gift card marketplace , has received a strategic investment from Citi Ventures , Citigroup’s investment arm. The size of the capital injection was not disclosed. The startup has previously raised over $23 million in financing from Jafco Ventures, Shasta Ventures, Redpoint Ventures and First Round Capital, among others. Plastic Jungle allows people to sell unredeemed gift cards for up to 92 percent of the gift card value, or purchase gift cards at a significant discount. The San Jose, California-based company says it exchanged “hundreds of thousands” of gift cards and “tens of millions” of gift card value across 400 brands in 2011.

Social, Mobile Gifting ...

Wrapp , a social gifting service, has raised $5 million series A funding from Greylock Partners and Atomico, the VC firm formed by Niklas Zennström, co-founder of Skype, Kazaa and other companies. The startup had previously raised $5.5 million in funding from Atomico and Creandum. As part of the most recent round, Greylock partner and LinkedIn co-founder Reid Hoffman will be joining Zennström, and Creandum partner Johan Brenner on Wrapp’s board of directors. Co-founded by Rebtel and SendIt founder Hjalmar Winbladh, Spotify founding CTO Andreas Ehn and others, Wrapp lets friends give, receive and redeem digital gift cards using mobile devices, and allows friends to contribute to gifts given by mutual friends. With Wrapp, which offers iPhone, Android and web apps, you sign in via your Facebook account, and you can then tap the Celebration tab on the app, browse your friends or major events, and select the person you want to send a gift card to. All available gift card offers for that friend are automatically listed. You can then select the retailer and the gift card offer you want, write your celebration greeting, select a delivery date, enter payment details (if you’re contributing extra funds to a free gift card), and send the gift. Your friend will be notified and celebrated through Facebook and the Wrapp application. Merchants can actually specify the amounts they’d like to offer via the service, and target specific demographics of users with gift card options, which is something other online social gifting options don’t allow. Wrapp is currently growing more than 30 percent week-over-week and is now working with more than 35 large and medium-sized merchants in Sweden including the country’s largest sporting goods retailer Stadium, Dixons Retail’s consumer electronics chain Elgiganten, Amazon’s LOVEFiLM.com, designer underwear brand Björn Borg, street fashion brand WeSC, and home improvement chain Clas Ohlson. In December alone, Wrapp users used the service to buy 250,000 gift cards. And the app has gone viral, with 2 percent of all Facebook users in Sweden downloading the app. AFter three months live in Sweden, one percent of the Swedish population has interacted with Wrapp. While gift cards is a massive, $100 billion industry, the market hasn’t really been disrupting with social and mobile technologies until now, says Hoffman. For Hoffman, who currently sits on six boards (out of a large number of investments), it’s impressive that he chose to take a board seat with Wrapp. He explained to me that in commerce startups, there’s the challenge of how to solve the equation in retail of being good for consumers, merchants, and for the business. “If you solve all three, you have an interesting and transformative play,” he says. Hoffman adds that Wrapp solves all three of these problems. First, the app allows consumers to easily send gifts to friends in groups or individually, for any occasion, and leverages mobile as well Second, on the merchant side, it provides an advertising platform as well as a way to bring people into brick and mortar (and online) stores. And merchants don’t have to spend anything unless consumers come in and purchase an item. The ability to target to specific demographics is also part of the winning formula for Wrapp. While the conventional way to purchase gift cards is at retail stores at the checkout line, this platform allows retailers to access a variety of information about potential customers including gender, age, where they live, and more. “This is inherently a very interesting viral play, with a pair of experienced entrepreneurs and an efficient way of helping both online and offline retailers,” Hoffman added. Winbladh tells us the new funds will be used to launch the social gifting service this quarter in the U.S. and U.K., and to expand throughout Europe and additional major markets around the world later this year. “We’re here to build a global company and do something completely new with the online to offline market opportunity,” Winbladh says. He says that the service is already in talks with a number of large online and big box retailers in the U.S. According to AllThingsD, Wrapp is looking to partner with retailers like Best Buy and Target at launch. Wrapp’s service is certainly appealing from both consumer and merchant standpoint. Now more than ever, retailers need to be looking for compelling technology plays to help draw traffic both online and offline. Similar to the way that ShopKick is innovating on rewards for retailers, Wrapp could be the answer for gift cards.

Holiday Shopping: It Ai...

Last night, after the gifts were opened and the holiday glow was being to wear off, I saw a TV commercial for Wal-mart that shook me to the core. Wal-mart opens at 5 a.m. on December 26 for the the biggest, blow-out, post holiday sale ever. I had instant Black Friday flashbacks. Seriously? 5 a.m.? I used to be a big post holiday shopper, but like 44% of the people Consumer Reports polled, I can’t deal with the crowds. Consumer Reports also says that the holiday shopping season will continue until the ball drops in Times Square as 4 out of 10 Americans say they’re still shopping. 82% are hoping to take advantage of post-holiday sales. And a quick look around, says there are plenty of deals to be had. Stores aren’t just marking down holiday items, they’re clearing the shelves. It’s not just the brick and mortar stores, either. Online retailers are still offering big discount codes. Target, Kohl’s, even Amazon is slashing prices online. But it’s not all money in the bank for retailers. 31% of those polled said they’ll be returning gifts this week, and 47% are redeeming gift cards. That’s my plan. I got a gift card earlier this month, for a store that is known for putting their gift baskets on clearance after Christmas. That means I’ll get more for my money than I would have if I’d redeemed the gift certificate last week. Of those staying home, 44% said they were “simply sick of shopping” and 20% said they were out of money. I hear that. . . but I still went online and bought a pair of sneakers today thanks to a hefty gift code from my favorite shoe site. Never underestimate the power of a deal.

Tango Card Aims To Make...

While gift cards are certainly a useful and practical gift, the act of giving a gift certificate to a store can be construed as impersonal. One startup is trying to change this. Tango Card, which offers a gift card program for consumers, is launching a new personalized experience, called ‘What I Got.’ For background, here’s how Tango Card works. A purchaser can buy a Tango Card, and give this to a recipient via email. The recipient can then exchanges the value for the card for one or multiple retailer gift cards (Amazon, iTunes, Target, Starbucks, others) or they can donate any portion of their gift card to one of 9 non-profits (National Park Foundation, World of Children, Habitat for Humanity, etc.). Any unused value can actually be redeemed for cash. Basically, it provides a more flexible gift card option which allows recipients to choose and then stagger the proceeds of a gift card across various retailers or charities. The Tango Card’s value can be used on the startup’s site or directly via its iOS and Android apps. The startup also offers physical Tango Cards for those that prefer a plastic product. With ‘What I Got’ (WIG), recipients can take a photo of what they bought with their gift card, and then share it directly with the person that gave it to them via the Tango Card iOS and Android apps. Tango Card users start WIG on the app, attach or take a picture of what they got, and select how to share the photo, via Facebook, Twitter, or a Picasa or Flickr album. The gift giver is notified by email and can instantly view how the gift card was used. The startup says that this is a more personalized way to close the loop with the gift giver. As founder David Leeds tells me, in November and December, U.S. consumers will receive about $30 billion in gift cards. Tango Card’s WIG offers a way to close the loop with the gift givers, and personalize the experience.