FreeMonee Grabs $34 Million to Compete in the Digital Coupon Craze
FreeMonee Network has raised $34 million to join one of the hottest Web 2.0 trends: Digital couponing.
Who knew it was so expensive to save money?
FreeMonee’s round was led by Charles E. Ryan, current chairman of UFG Asset Management and former chief country officer and CEO of Deutsche Bank Group in Russia. Returning investors, including Redpoint Ventures, Sutter Hill Ventures, Opus Capital Ventures and Pinnacle Ventures, also participated.
To date, the company has raised $45 million in total.
FreeMonee falls somewhere in between a Groupon and a rewards program, like the ones offered by American Express.
The first time I wrote about FreeMonee, I explained: “The idea piggybacks on concepts that have been in existence for years. Today, credit card companies reward customers with points when they visit certain hotels or rental car companies, so why can’t that be applied on a much wider basis? Why can’t your credit card company track how much you’ve spent at particular retailers, and calculate what rewards you may qualify for?”
The offers don’t need to be purchased in advance or printed out. Consumers automatically get the discount when they use the same credit card that received the offer. The offers can appear in a number of formats, from a Web site to an email or a line item within their bank statement.
While there are a dozen or so companies competing in this general card-linked offer space, FreeMonee has another spin on the concept, too.
They aren’t actually offering coupons, but are handing out gifts. Merchants, retailers and restaurants sign up with FreeMonee to grant consumers $5 or $10, in the hope that they will come into the store and spend much more. Once the purchase is made, a credit appears on the consumer’s card within three to 14 days. Cardholders can’t directly enroll in the program, but must access promotions through their financial institution. By this definition, the company is competing with Wrapp, a social gifting company.
The massive funding round will go toward hiring and to build out the support teams in charge of managing bank deployments.
Here’s the full release:
FREEMONEE NETWORK RAISES $34 MILLION,
MORE THAN THREE TIMES ITS SERIES A ROUND
Fueled by Rapid Expansion with Top Retailers and U.S. Card Issuers,
FreeMonee is Driving Marketing Spend Shift—Changing the Economics of Advertising
SAN MATEO, CALIF. – August 7, 2012 – FreeMonee Network, the world’s first and only provider of consumer gift incentives, today announced $34 million in investment funding led by Charles E. Ryan, current Chairman of UFG Asset Management and former Chief Country Officer and CEO of Deutsche Bank Group in Russia. Returning investors, including Redpoint Ventures, Sutter Hill Ventures, Opus Capital Ventures and Pinnacle Ventures also participated. This round is more than triple the initial $11 million 2010 Series A round and brings the company’s total raise to $45 million. The new funding will fuel FreeMonee’s rapid expansion.
“FreeMonee Gifts are a new class of consumer incentive that will change the economics of advertising forever, marking the death of coupons,” said Gadi Maier, CEO, president and co-founder of FreeMonee. “The FreeMonee promise may seem too good to be true—and our early results extend that perception, with sales lift of 400–700 percent and return on ad spend of 500–900 percent. These amazing results far surpass the performance of existing marketing products, so demand is exceeding our early expectations. The new funds will help us to expand FreeMonee to even more retailers and broaden programs with top U.S. banks and credit card issuers.”
FreeMonee’s product addresses three key challenges facing the market today: retail marketers struggle to drive growth without resorting to brand-eroding coupons or discounts; consumers labor through floods of offers and deals; and financial institutions seek new products to positively engage customers. FreeMonee Gifts are unique consumer incentives that meet these challenges head-on and deliver clear benefits to each group:
1) Retailers generate profitable new sales at scale.
2) Consumers receive relevant and irresistible incentives.
3) Card issuers engage customers while increasing card usage.
FreeMonee Gifts link directly to a consumer’s credit or debit card, delivering cash gifts that can be spent on any purchase at designated stores or restaurants. Unlike a coupon, the consumer is free to spend any amount they want—there are no conditions.
To deliver a no-strings-attached incentive to consumers, that is profitable for retailers, is extremely difficult. FreeMonee invested two years in developing a proprietary Gift Underwriting Engine that matches the right gift, to the right consumer, at the right amount. The results are response rates that are 10–50 times that of traditional promotions or coupons and profitable new sales for merchants.
“FreeMonee is attractive because it is a simple, powerful idea that will change how marketers reach customers. The company should be the beneficiary when marketers shift their ad spend from less efficient vehicles to the FreeMonee approach,” said lead investor Charles E. Ryan. “This is the first really big idea to come along in the retail marketing space in a long time, and I believe it will change the game. I was excited to lead this round, because I want to be part of the sea change in advertising that FreeMonee will create.”
Of the $300 billion merchants spend annually on promotions and direct marketing initiatives, much is wasted because it doesn’t shift consumer behavior. Offers, even in their newest forms, are not motivating consumers to act in a substantially different way. The FreeMonee Gift is proven to be different. Consumers love the simplicity and freedom offered by a FreeMonee Gift and go out of their way to visit the store or restaurant and use that gift before it expires. As a result, more of the dollars spent by marketers go directly into the hands of consumers, creating a far more effective and efficient way for merchants to generate incremental sales.
Since its November 2011 consumer launch, FreeMonee is experiencing rapid growth. FreeMonee currently delivers gifts through partnerships with four of the top eight banks and card issuers, and is in development with several others. Fueled by unprecedented initial results, FreeMonee now delivers FreeMonee Gifts to millions of customers each week from a variety of merchants across 30 categories.
About FreeMonee Network
FreeMonee is changing the economics of advertising by enabling stores and restaurants to attract customers on demand using FreeMonee Gifts. With its unique new consumer incentive, FreeMonee delivers gifts of money directly to cardholders of the largest financial institutions. Customized to precisely match consumer interest, gifts allow consumers to purchase anything they want at designated stores or restaurants—no strings attached. The gifts are made possible by FreeMonee’s proprietary Gift Underwriting Engine, which accurately determines the right gift to ensure the highest level of consumer interest and the best return on ad spend for a merchant. Unlike traditional coupons or offers, FreeMonee Gifts feel like a gift card from a friend—money to spend at places consumers like. For retail marketers, FreeMonee Gifts enable brands to attract large volumes of profitable, incremental customer visits—without discounting. For banks and credit card companies, FreeMonee provides the opportunity to positively engage customers and strengthen loyalty.
Founded in 2009 and located in San Mateo, California, FreeMonee is led by former executives of Google, Visa, Oracle, Cisco, Procter & Gamble and Coca- Cola. To date, FreeMonee has raised $45 million in funding with investments from Charles E. Ryan, Opus Capital Ventures, Redpoint Ventures and Sutter Hill Ventures, among others. Through continued partnerships with the top U.S. financial institutions, the company expects 50 million households to have access to FreeMonee Gifts in 2012. For more information, please visit www.freemonee.com.