Trustpilot, the online customer reviews service with nearly 7 million reviews on its platform covering 100,000 merchants to date — and a partner in Google’s Adwords business – is today announcing another €10 million ($13 million) in funding. The investment is led by new investor Index Ventures, with participation also from existing backers SEED Capital Denmark and Northzone, the Scandinavian VC that is also an investor in Spotify.
The Danish company says that it will be using the funds to continue its global expansion with the aim to become the go-to place for people to rate their online shopping experiences. With €5 million in backing prior to this current round, Trustpilot says it is already active in its home country of Denmark, as well as the UK, France, Germany, Netherlands and Italy and is working on extending its reach in the U.S.
The world of online reviews has had a bad rap, with one main issue being that reviews can be gamed fairly easily with fake complimentary (or critical) posts; another issue is reviews can simply be edited to suit the goals of the company asking for reviews in the first place.
But even with those credibility gaps, online reviews have come to be seen by many as an important part both of how consumers make decisions online and stay engaged on a site — review forums being a little like proto-social networks of a sort.
On top of that, there are already a lot of go-to places for reviews. Peter Mühlmann, the founder and CEO of the company, says that Trustpilot is different from the likes of Yelp or eBay-owned Epinions because of its singular focus on e-commerce sites. “Whereas a site like Epinions and others focus on reviews of many different things, we solely focus on reviews of companies that are selling goods or services over the web,” he told me in an interview.
Trustpilot’s business model is to not only create a primary site of its own where all reviews live — you can search past reviews on Trustpilot.com by searching on company name, and add yours as well — but its business model is based around also offering a set of APIs to integrate their reviews platform on to the e-commerce sites themselves, which companies can run white-label, customized to look like the rest of their sites.
“Utilizing reviews in ads and on their website boosts companyes’ core KPI’s like click through rates, conversion rates and basket size, which translates directly into improvements on the bottom line,” he notes.
He says that the company has also now started to see its widgets also getting integrated on to price comparison sites and other third-party platforms. Perhaps the most well-known of these is Google, with whom Trustpilot has a licensing relationship that covers Seller Rating Extensions — customer reviews — which link up with Adwords purchases. Google uses these to drive Adwords purchases, and says that “on average, ads with Seller Ratings get a 17% higher CTR than the same ads without ratings.” Trustpilot says that at this time Google licenses Trustpilot’s reviews for Seller Ratings Extensions on Google.de Google.co.uk, Google.com, Google.fr and Google.nl.
It may be the dual relationship that Trustpilot is bridging — first between itself and merchants, and then between itself and the likes of Google — which is what makes the company attractive to investors.
“The Trustpilot concept is a brilliant one which creates substantial value both for merchants who wish to highlight their service credentials and for consumers who want to identify trustworthy service providers in an increasingly crowded online world,” said Ben Holmes, partner at Index Ventures, in a statement. “The Company has executed the vision excellently and established a strong position in multiple geographies.”
The Google relationship is not an exclusive one, meaning that if, say, another portal wanted to incorporate Trustpilot reviews to improve their effectiveness in doing business with merchants, or providing more information to their consumers, they could.
As for the bad rap for reviews, Trustpilot is trying to tackle that, too — starting first with its actual name, but also extending to its business model.
Essentially, it’s only customers who are contacted to leave reviews — meaning you have to have made a transaction on the site. “As we offer companies a solution to invite all their customers to leave a review of their service, we know there is an actual transaction behind the majority of the reviews,” he notes. That minimizes the chance for random posting, and also means that Trustpilot is gradually building up a strong database of the most engaged consumers.
Going forward, Mühlmann says he wants to add more gamification and loyalty elements into the service, and to put more focus on authenticity and real identities. It plans to do this by linking up the service more closely with other platforms, like Facebook’s, which consumers have started to trust already with their real identities:
“I would like it to be more engaging/rewarding to participate on the site,” he says. “I also think that in the reviews space (and in the world of consumer generated content in general), trust in anonymous contributions is declining, so we are working on making it easier for reviewers to validate themselves (for example by connecting their profile on Trustpilot with various social networks).”
Trustpilot is an open, review-driven community connecting online consumers with the companies they buy from. Shared shopping experiences help consumers make smarter, informed decisions about buying, while companies get concrete feedback from their customers. Trustpilot is passionate about driving transparency across the web–find Trustpilot reviews on search engines, social media, and business websites. Real customer insight fuels business credibility.
Index Ventures is a leading venture capital firm specializing in investments in information technology and life sciences companies. The firm invests in seed, early and growth stage start-ups across US and Europe. Since its inception in 1996, Index Ventures has backed visionary entrepreneurs who have taken on incumbents and built seminal companies in a number of growth sectors including: open source software companies such as MySQL, Trolltech, Zend and Pentaho; broadband and VOIP companies such as Virata, Skype, FON and...
Northzone is a technology investment partnership. With four offices and nine investment professionals across the Nordics and most recently the UK, Northzone’s focus is on disruptive companies in attractive markets. Since its inception in 1996, Northzone has invested in over 75 companies, injecting some 200 years of collective operational and investment experience into businesses that truly make a difference. Notable investments include Lastminute.com, Pricerunner, Spotify, Nextgentel, Funcom, Stepstone, Nimsoft, EPiServer, Avito and Mamut.