With the combo of location, mobile and loyalty deals having been seemingly anointed 2011’s most promising tech opportunity, SCVNGR, a smartphone app that rewards users for checking in and completing challenges at locations, has found its third funding round.
The $15 million investment is led by Balderton and joined by existing backers Google (NSDQ: GOOG) Ventures and Highland Capital. The addition of Balderton, the former Benchmark Europe, seems designed to grow Boston-based SCVNGR in Europe. Balderton’s Barry Maloney joins the board.
SCVNGR had raised $4 million from Google Ventures and others in December 2009, following a $750,000 first round from Highland. Google’s investment allowed SCVNGR to populate its overseas location database through the Google Places API. With a repeat investment from Google Ventures, could SCVNGR yet play a bigger part in Google‘s response to the mobile location rewards paradigm?
Foursquare, Gowalla and SCVNGR each have marginally different takes on mobile social location, but each sees marketing partnerships and the provision of loyalty- and presence-based rewards as a business model. SCVNGR, which leads more on “gaming”, affords social “check-in” activity sharing and gamesmanship like the others do, but also invites users to complete “challenges”…
They are rewarded with points, which can eventually be redeemed for real-world rewards at stores by showing their smartphone to a cashier. This has brought SCVNGR partnerships with brands and bands including American Eagle Outfitters, Nissan, Weezer, New York Times (NYSE: NYT) and Coca Cola, which last November rewarded with free Cokes SCVNGR users who took photos of themselves in shopping malls high-fiving people drinking Coka.
According to Balderton: “They’ve signed up 1,000 paying clients so far. This was the focus of the business in the first half of 2010; from the second half of 2010 onwards, they’ve focused on building up the consumer base.
“They did $1 million revenue in 2009 when SCVNGR was still a text-based game. They launched on the iPhone and Android in May 2010 and have been making multiples of that number.
“It took Foursquare 18 months to get to 500,000 users – it took SCVNGR 20 weeks. It will have one million by the end of January.”
Balderton is thought to have been impressed by SCVNGR’s CEO, 22-year-old Princeton drop-out Seth Priebatsch. The round is said to have been well contested.
As much as some developers get off on threading “game mechanics” in to the offline world, it’s likely the discounts and rewards themselves which will prove a bigger draw for users, as consumers look for savings in 2011.