Backed by Lightbank, the investment fund created by Groupon (s GRPN) founders Eric Lefkofsky and Brad Keywell, Chicago-based Boomerang aims to provide a social gifting platform centered around local merchants.
The startup, which has raised nearly $1 million from Lightbank, MediaBank, InnerWorkings and Echo Global Logistics, launches Tuesday to let Facebook (s FB) users send digital gifts, including vouchers for restaurants, spas, sporting companies and other local businesses, to friends in their network.
“We think gifting is a massive space where [local merchants] have traditionally been left out of the equation,” said founder and CEO Zachary Smith. “We think there’s a huge opportunity and we’re ready to jump on it.”
American consumers spend $100 billion a year on gift cards, he said, but the lion’s share of that goes to national retailers because local businesses haven’t been able to get distribution on the platforms centered around gifting. Through Boomerang, local merchants can offer unique packages of goods and services, from free options (which get new customers in the door) to full-price dinners, movie tickets, spa packages and more.
Much like Karma, the social gifting platform acquired by Facebook in May, Boomerang scans a user’s Facebook network for gift-worthy special occasions, like birthdays, anniversaries, promotions and more, and then it personalizes options based on location and interest data. Swedish social gifting startup Wrapp also delivers gifts, in the form of gift cards, to Facebook friends. But Smith said Boomerang’s focus on local merchants makes it distinct.
The gifts are delivered digitally via links through email or Facebook and can be redeemed by showing a merchant the offer on a smartphone screen. While Smith wouldn’t disclose the exact percentage of the transaction taken by Boomerang as a fee, he said it was in the low double digits.
In addition to working with local business, he said Boomerang will partner with at least one non-profit in each city to let gift-givers make donations in recipients’ names. For now, the 10-person startup has partnered with 40 merchants in Chicago, including the Navy Pier IMAX Theater, Metropolis Coffee and Bike and Roll Chicago, but Smith said they have started hiring teams in two other cities and plan to go live in those areas later this month.