Penny auction site MadBid secures £4m funding from Atomico Ventures

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MadBid, a fast growing “pay-to-bid” auction site has secured £4 million in a Series A funding from Atomico Ventures. Launched in 2008, MadBid is one of a number of pay-to-bid auction sites which have appeared in the last couple of years, with Swoopo among them. CEO Juha Koski says the Atomico investment will be spent on technology and expanding in Europe. Mattias Ljungman of Atomico has joined the board.

MadBid is claiming 1 million users since launch and says customers are attracted by brand products with the possibility of saving of 80% on the RRP of an item. That drives people to bid of course and so the site makes its money off the customers who are not successful, not unlike a casino.

In fact some gambling experts such as Professor Mark Griffiths of Nottingham Trent University, have called “penny auctions” similar to lotteries and called for similar regulation. However The Gambling Commission has not ruled on the matter and Koski insists that penny auctions are a “game of skill”. MadBid says in its defense that many penny auction sites are registered abroad in countries such as Malta and do not deliver on what they promise.

How does it work? The sites auction new items, often for a fraction of their retail price, and bidders pay up to £1.50 for each bid. Unlike eBay, where you can bid for free, users have to pay between 40 pence and £1.50 to place a bid. Bids automatically rise by 1p at a time, and some people make repeated bids. The last person to bid gets the item, for however much it is worth after what can be hours of monitoring.

That model is a license to print money.

MadBid says it generated over £2.5million in the first year of operation and it’s sold over £5million worth of products and 80,000 auctions have been won. Turnover is projected to reach over £20 million by the end of 2012.

Atomico founder Niklas Zennström, best known as a cofounder of Skype, says MadBid “allows the most skillful to get amazing bargains” and it had gained a lot of traction “in a short period of time.”

The site has has 22 employees and is based in the UK.

  • oguz goker

    i hope people are aware, this is totally gambling. goverments should license them as gambling

    • dopefish

      Came here to say exactly this. They are not bidding sites, when they extend the timeline of the bid, it turns into who pays for the longest.

      Its a COMPLETE gamble and them advertising as genuine auction sites is nothing short of fraud.

      • Fael

        It’s a big scam to collect money from naive people. There is no way you can check whether they are not bidding for themselves.

    • JoshK


    • Jonathan

      FYI, many penny auction sites these days offer “buy it now”, which lets you convert 100% of your pay-per-bid money into a discount off the item. This pretty much removes the gambling aspect of these auctions, as the worst that can happen is you pay retail on an item if you lose.

      Disclaimer: Yes, I run It’s not a scam, it’s not gambling, and if you talk to our customers, you’ll find they’re pretty happy.

      • dopefish

        I’m intrigued. Are the discounts directly proportional to how much you spent on bidding? Are they the same amount as the amount you spent on bids? In this case doesn’t it suddenly make the business model a bit rubbish (from the business aspect anyway)?

      • Jonathan

        The short answer is yes, you can get the same amount you spent in bids as a discount. The longer answer is each site does this slightly differently. For instance, on, you get a 100% discount if you buy our largest bid pack, which scales down for smaller bidpacks.

        In terms of a business model, the profit margin definitely goes down by doing this but you get a lot happier and more loyal customers.

      • Tony phillips

        Hi Jonathan, I would like to get in contact with yourself to talk about your site, how would this be possible?

        Regards Tony

  • Miguel Ramos

    This is great news! Madbid for me is the most trustfull penny site auction out ther, and has been providing bargains fot its winner for almost 2 years now. It is not one of those based in Malta, Cayman Islands,… ABout the auctions, of course not everyone wins! In order to win you need to have a goos strategy, study the auctions, the other users behaviour, and have enough cash to supporto your strategy by buying the necessary bids! Packs of bids are the best way to get there. I think Madbid will end up as one of those memorable cases of success, in the line of Ebay, Skype, and Facebook.

    • dopefish

      Trustfull? That’s not even a word! If your going to spam your crap at least do it properly.

      These are nothing more than gambling sites aimed to lure gullible people who don’t know what the real game is until they’ve spent a bunch of money and got nothing in return.

      They are dishonest and a sham.

      • chris M

        Please keep discussions civil and objective, don’t disparage non-English speakers for their slight grammar mistakes, I’m sure you know what he meant! How’s your Spanish? Otherwise I tend to agree that the mechanism is akin to what get’s people hooked on gambling and should be regulated.

  • Dave Humphreys

    I disagree! Yes it is a pay-to-bid auction site but it’s great. I’ve probably spent about £300 but I’ve won an iPhone, a hard drive and a netbook which I think would be around £1000 roughly.

    At times it can be frustrating but overall it’s great!

    Good luck to them!!

    • Jim Anthony

      I agree with Dave. I have watched MadBid and other pay-to-bid sites for a while now. They are pretty up front about bids costing money and they do hand out some pretty awesome prices. I think they get a bad rap because people obsess over the one auction that goes on really long and makes a lot of money and completely ignore the 10 other auctions that went for pennies. I don’t know about it being a license to print money, but it is definitely fun to win big as long as you know what you are doing.

      Dopefish, I don’t think Miguel is shill, with £4 million you would think they could afford to pay for good spelling, more likely just another troll.

      • Eff You

        The funny truth is:

        Almost all commenters are shills…

  • Louis Duclert

    Ned Augenblick from Stanford University has clearly demonstrated that there is no winning strategies in Swoopo-like sites. Paper can be found here:

    Mad-bid is nothing more than a casino.

  • Vishal Sanjay

    This is purely a gambling site, I’m even surprised that its got 1 million users, but one thing I can be sure about is that no one with the main aim of buying something would and not all will be able to sell their products, but for a selected few their products will sell for huge prices, maybe even double the listing price.

  • ELp

    German competitor Dealstreet ( backed by the European Founders Fund apparently went bust earlier this year.

    So I am not sure that it really is a money printing machine..

  • Penny auction site MadBid secures £4m funding from Atomico Ventures – TechCrunch (blog)

    […] Penny auction site MadBid secures £4m funding from Atomico VenturesTechCrunch (blog)MadBid, a fast growing “pay-to-bid” auction site has secured £4 million in a Series A funding from Atomico Ventures. … Raises £4 MillionPrivate Equity Hub (press release)all 2 news articles » […]

  • Mediaman

    Im sorry this sounds like gambling to me.

  • MadMed

    “registered abroad in countries such as Malta”

    Malta is a very well regulated and controlled igaming location. Many IT and Igaming companies are based there. Malta is the hub of European Igaming. I dont think its fair to insinuate things towards the whole country/industry based on no facts.

  • Richard Jarvis

    Whether the site is a gambling business or not is decided by the regulations. I’m sure Atomico has done its homework thoroughly to check if the company is sparkling clean before investing that heavily.

    The site is pretty upfront about the fact that you need to pay in order to place a bid. @Louis – the report isn’t as black and white as you suggest. The writer clearly states the relationship between user experience and winning, which is common sense. The more you do something, the better you get at it.

    While I don’t think I’ll be using their service, I don’t think it’s a “scam” as a lot of guys here seem to think. More like people who don’t know what they’re getting into and then complaining that they’ve been ripped off.

  • Catbackpack

    Come on TechCrunch – MadBid? Have you not heard of DubLi, which is a far bigger reverse auction site? They’re global, debt free (as far as I am aware) and even have a proper shopping mall appended to the bids!

    MadBid are amateurs in comparison.

  • Jonathan

    It’s a horrific business model that leaves the losers paying money to subsidize the winners. What that accomplishes is it treats 99% of your potential customer base terribly while rewarding a small percentage of ‘winners.’ It’s a business model guaranteed to burn out as more and more people lose money and get left feeling mistreated.

    And unlike gambling, you can’t win actual money, and there are no hot girls walking around with free drinks (ie there’s no entertainment value, which is a huge part of why people go to Vegas to gamble).

    • Matt

      Consumers don’t have business models. I agree that for a consumer this is a horrible idea, but it’s actually a terrific business model.

      Make about $2,000 from bidders on a ipad. Don’t have any inventory, you buy the product once the auction is over. Plus it’s very intriguing to people that have no idea how bad it is to try to win…

      Of course, it is a scam and the owners karma will eventually get them back

    • Kameko Oliver

      I assure you, there is a legit business model which leverages some of the pay to bid concept without making the consumer feel like they’ve been scammed.

      Once we’re able to secure funding to release the concept, we will effectively make most of these “Penny Auction” sites obsolete. I can promise that.

  • downhunter

    I don’t know how these guys make so much money in just couple of years…
    I’ve read some ebooks about making money… downloaded from
    but I don’t think that I can make this much in two years…
    anyways you guys should pay a visit to that site…
    you will get too much free stuff there…
    and you’ll surely find something of your interest


    Penny Auctions are great, I actually bought a 42″ TV for $182 I was probably lucky…

    Also a reminder, make sure to visit this newest social network and register to get notified when it comes live.

    • Matt

      Why would anyone give their email to a company that spams the hell out of comments???

  • jon

    All of these sites are scams – they display huge, misleading discounts when actually the “price” an item sells for based on the bid increments has nothing to do with the actual amount of money than any of the bidders paid. I can’t believe sites like this continue to get so much attention without any sort of scrutiny by journalists and VCs.

    • Jonathan

      I think you should reserve judgment on a site-by-site basis. For instance, on, we’re pretty upfront about the discounts:

      Please let me know if you find that misleading in any way.

  • Ryan

    All these comments and no one has mentioned how much of a TRAIN WRECK that logo is??? Whoever designed that should go back to kids books!

  • Kameko Oliver

    Though this plays against my own interests, penny auction sites need to establish at least two aspects if they want their business model to survive. And yes, I am especially talking to the venture backed sites such as Swoopo, Bigdeal and now Madbid.

    1. Do everything in your power to increase transparency – your credibility is at risk. You can shill bid, and nobody can tell the difference.

    2. Establish a firm ship date after the customer actually pays for their product. Shipping a customer’s item 2 months after they’ve paid is absolutely not good customer service.

    3. Make your selves easily accessible to your customers should they have an issue that requires your attention.

    That’s all the advice I’ll give for now because after all, I am trying to dethrone most of em. So I’d at least like for them to not do it to themselves.

  • Jayson Zopp

    From my experience, is up-front and honest in their portrayal. I have never had a problem with the site.

  • Madbid Secures £4m Funding
  • Toni Kirchner

    There are some pretty interesting comments here. We are opening a site Sept. 1st called Vacation4Pennies that we believe is a lot more fair to customer then most penny auction sites. Every time you buy a bid package from us, we will give you redemption points which you can accumulate to get items for free. Not only is that one option but you also have the option of applying your bids to buy the item out right.

    You can sign up now for FREE to become a beta-tester and have a chance to play on Sept 1 where will be auctioning off all sorts of items include an Ipad.

    Let us know what you think.

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  • Penny Auction

    It’s definitely perfect post!
    Thanks a ton,
    Penny Auction!

  • sally K

    does anyone know what percent of madbid was given for that funding?

    ive never bid on madbid as i bet hundreds of others have and i would not be in with a chance! i found another UK one- biddi my friend won a speaker system from there.

    They are fun sites but I guess you can get carried away.

  • Dave Humphreys

    Its amazing – I can’t believe the amount of posts on here that are blatantly advertisements from other sites lol…all trying to feed of the market leader haha…good idea though. MadBid is a good site, I joined after I first saw this article and I won a few bits and they all got delivered fine but to be honest Ive not used it for a few weeks because it is bloody hard to win. Good idea though but just not for me

  • http://www/ Elin

    That was a good info. There have been a lot of investments in penny auctions. Now, with the ending of this decade, penny auctions are just over shadowing the auction market. There is tremendous increase in penny auction sites. :-p

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