Greylock’s Reid Hoffman Invests in Swedish Social Gifting Company
Stockholm-based Wrapp, which was founded by former executives from Spotify, Groupon and other companies, has just received a $5 million gift from Reid Hoffman of Greylock Partners.
The company, which plans to launch soon in the U.S., has created a way for people to easily give gift cards to their friends through social channels such as Facebook.
Greylock will contribute $5 million to the company’s first round, increasing the total to $10.5 million. Creandum — along with Atomico, which was founded by Skype co-founder Niklas Zennström — invested in the round last year.
“The gift card industry has grown to a $100 billion industry, and yet very little innovation has been done around social networks and smartphones,” Hoffman said in an interview. “You put those two things together and suddenly you get a much easier way to give.”
The funding will be used to launch the service in the U.S. and the U.K. this quarter, with other markets following.
The social gifting service has three components:
First, people can learn about their friends’ birthdays or other occasions on Facebook, or through notifications on their mobile phones.
Second, users will be able to give friends gift cards that mutual friends or family members will be able to contribute to on Facebook.
Third, Wrapp is partnering with retailers and merchants which will also contribute $5 or $10 to the card.
The logic is that if many people are willing to contribute to a gift card, the gift becomes more meaningful. Retailers are willing to participate because it might drive traffic to the stores and get consumers to buy something that they normally may not have bought.
Wrapp was started 2011 by Hjalmar Winbladh and others, including Andreas Ehn, Spotify’s founding CTO, and Carl Fritjofsson, an advisor to Groupon.se.
Wrapp is currently growing more than 30 percent every week in Sweden, where it is working with more than 25 merchants. Already, 2 percent of the nine million residents there are considered active users of the service.
“It’s certainly showing a great early curve in Sweden, and we have every expectation the curve will be replicated in other places, like the U.S.,” Hoffman said.