I had the privilege of seeing Chuck and Josef present at Oasis Summit earlier this spring. They certainly had some exciting news just around the corner... Congrats to this great Los Angeles company and inspiring team!
El Segundo-based coupon site Swagbucks secures $60 million in venture capital
By Jordan England-Nelson, Long Beach Press-Telegram
POSTED: 05/13/14, 5:55 AM PDT |
A South Bay tech company has raised $60 million in its first round of external funding from Technology Crossover Ventures, a late-stage venture capital firm that has backed such heavy hitters as Facebook, Netflix and Spotify.
Swagbucks.com, whose parent company Prodege LLC is headquartered in El Segundo, offers gift cards to Wal-Mart, Nordstrom, Amazon.com and about 300 other e-commerce companies in exchange for interacting on its site. Users earn points — or “swag bucks” — when they shop, search the Web, play games or take quizzes. The company then uses the data collected to run targeted ads and drive traffic to its affiliates.
“Rewards are not just an aside, they become an emotional part of the experience,” Swagbucks President Josef Gorowitz said by phone Monday. “The consumer is constantly collecting points and having fun doing so as well.”
Swagbucks, which bills itself as the “leading rewards discovery community” and top provider of free gift cards, announced its new funding today in a press release.
The company also announced that Prodege Executive Chairman Chuck Davis will become Swagbucks’ new CEO, a role previously held by Gorowitz.
Davis’ resume includes running the discount shopping site Shopzilla and, more recently, the online movie ticket site Fandango. Davis also is a partner at Technology Crossover Ventures.
The announcement of Swagbucks’ venture funding comes amid what seems to be a boon in the online rewards and coupon sector. RetailMeNot Inc. had its initial public offering in 2013. Pre-IPO shares of Coupons.com Inc. jumped 90 percent after it went public in March. And Ebates Shopping.com Inc. is reportedly planning its IPO for later this year.
However, the real value of these rewards sites, which purportedly create value by driving traffic to affiliate partners, may be overblown.
“One of the biggest problems in e-commerce is attribution,” said Brooke Partelow, co-founder of Bounce Exchange, a conversion rate optimization company that tracks website-user engagement. “They may be taking credit and getting paid a commission for a sale that the site was going to have anyway.”
Reward platform sites like Swagbucks say they drive new customers to vendor sites, but those customers may have planned to buy from those vendors regardless. A person might search for a Hugo Boss suit on Google, find the one they want at Nordstrom.com, and then search for a coupon code.
“Vendors have a very hard time determining who gets credit for helping them sell more,” Partelow said.
Swagbucks’ $60 million deal is a coup for the tech scene in Southern California, where large scale venture capital is harder to come by than in Silicon Valley.
There’s been a lot of investment in Silicon Beach companies in West L.A. recently, but the funding tends to hover between $500,000 and $2 million, according to Matt Crowley, president of the Los Angeles Venture Association.
“When you reach out to VCs, you run into a really hard ceiling,” Crowley said. “Anytime someone raises that much money, it’s darn impressive.”
Venture capital firms invested $9.5 billion in the United States during the first quarter of 2014, according to the PricewaterhouseCoopers Money Tree Survey. About half of that was spent in Silicon Valley. Only 5.5 percent, or $520 million, was spent in the Los Angeles-Orange County area.
According to an interactive map on socaltech.com, a news site that keeps tabs on the industry, there are about 650 technology companies in Silicon Beach, the area stretches along the coast from Santa Monica south to Playa del Rey and east to Playa Vista. There are about 300 tech-related firms in the South Bay, according to the map.
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