Social, Mobile Gifting Service Wrapp Raises $5M From Greylock And Atomico To Launch In The US And UK

Wrapp, a social gifting service, has raised $5 million series A funding from Greylock Partners and Atomico, the VC firm formed by Niklas Zennström, co-founder of Skype, Kazaa and other companies. The startup had previously raised $5.5 million in funding from Atomico and Creandum. As part of the most recent round, Greylock partner and LinkedIn co-founder Reid Hoffman will be joining Zennström, and Creandum partner Johan Brenner on Wrapp’s board of directors.

Co-founded by Rebtel and SendIt founder Hjalmar Winbladh, Spotify founding CTO Andreas Ehn and others, Wrapp lets friends give, receive and redeem digital gift cards using mobile devices, and allows friends to contribute to gifts given by mutual friends. With Wrapp, which offers iPhone, Android and web apps, you sign in via your Facebook account, and you can then tap the Celebration tab on the app, browse your friends or major events, and select the person you want to send a gift card to. All available gift card offers for that friend are automatically listed.

You can then select the retailer and the gift card offer you want, write your celebration greeting, select a delivery date, enter payment details (if you’re contributing extra funds to a free gift card), and send the gift. Your friend will be notified and celebrated through Facebook and the Wrapp application. Merchants can actually specify the amounts they’d like to offer via the service, and target specific demographics of users with gift card options, which is something other online social gifting options don’t allow.

Wrapp is currently growing more than 30 percent week-over-week and is now working with more than
35 large and medium-sized merchants in Sweden including the country’s largest sporting goods retailer Stadium, Dixons Retail’s consumer electronics chain Elgiganten, Amazon’s, designer underwear brand Björn Borg, street fashion brand WeSC, and home improvement chain Clas Ohlson.

In December alone, Wrapp users used the service to buy 250,000 gift cards. And the app has gone viral, with 2 percent of all Facebook users in Sweden downloading the app. AFter three months live in Sweden, one percent of the Swedish population has interacted with Wrapp.

While gift cards is a massive, $100 billion industry, the market hasn’t really been disrupting with social and mobile technologies until now, says Hoffman. For Hoffman, who currently sits on six boards (out of a large number of investments), it’s impressive that he chose to take a board seat with Wrapp.

He explained to me that in commerce startups, there’s the challenge of how to solve the equation in retail of being good for consumers, merchants, and for the business. “If you solve all three, you have an interesting and transformative play,” he says. Hoffman adds that Wrapp solves all three of these problems.

First, the app allows consumers to easily send gifts to friends in groups or individually, for any occasion, and leverages mobile as well Second, on the merchant side, it provides an advertising platform as well as a way to bring people into brick and mortar (and online) stores. And merchants don’t have to spend anything unless consumers come in and purchase an item.

The ability to target to specific demographics is also part of the winning formula for Wrapp. While the conventional way to purchase gift cards is at retail stores at the checkout line, this platform allows retailers to access a variety of information about potential customers including gender, age, where they live, and more.

“This is inherently a very interesting viral play, with a pair of experienced entrepreneurs and an efficient way of helping both online and offline retailers,” Hoffman added.

Winbladh tells us the new funds will be used to launch the social gifting service this quarter in the U.S. and U.K., and to expand throughout Europe and additional major markets around the world later this year. “We’re here to build a global company and do something completely new with the online to offline market opportunity,” Winbladh says.

He says that the service is already in talks with a number of large online and big box retailers in the U.S. According to AllThingsD, Wrapp is looking to partner with retailers like Best Buy and Target at launch.

Wrapp’s service is certainly appealing from both consumer and merchant standpoint. Now more than ever, retailers need to be looking for compelling technology plays to help draw traffic both online and offline. Similar to the way that ShopKick is innovating on rewards for retailers, Wrapp could be the answer for gift cards.