Fantasy Shopper becomes one of Europe’s hottest startups with $3.3m from Accel and NEA

Fantasy Shopper is a social shopping game where players discover and share the latest fashion from real-world online and offline retailers. It’s gained a lot of traction since it’s launch last October, especially amongst women and we’ve heard on the grapevine that it was piquing the interest of investors for some months since emerging from the European Seed accelerator HackFWD.

Today that intense interest has been confirmed with a first round of funding led by top tier venture firms Accel Partners and NEA (one of the key investors in Groupon) to enable it to build out engineering and expand into new cities other than London. With NEA co-leading the investment, clearly there is a big opportunity to scale in US cities and elsewhere. The investment is based on a convertible note not equity, which is standard practise when investors want in fast and the round is hotly contested.

It’s understood that 15 high profile angels from the world of fashion, music, celebrity and tech investing have also participated in the round but Fantasy Shopper is not releasing those names as yet.

Fantasy Shopper allows users to spend fantasy money on virtual representations of fashion items, then share those items – or even whole wardrobes of outfits – with their friends and also buy them either online or, more importantly, in real, physical stores. Retailers then use that information on users’ tastes to offer deals, discounts and specials. That’s a pretty new take on so-called “social shopping” and it’s proving to be a smash hit with UK women.

Figures aren’t available on numbers of users, but the startup claims to have increased its user base by 200% month over month, with members spending an average of 28 minutes on the site per visit.

“Fantasy Shopper brings together everything we love about social gaming and e-commerce and will generate real-time, real-world data that will be priceless to retailers,” said Harry Weller, General Partner, NEA.

Founded by Chris Prescott and Daniel Noz in the regional UK city of Exeter (yes, really), the startup has a small team it will now expand significantly. The team certainly knows its code. Shortly after its UK beta launch in October 2011, the startup became the first non-US based business to win the Amazon Global Startup Challenge, in a contest that featured more than 1500 startups from 78 countries.

In an interview at DLD, Sonali de Rycker, Partner at Accel Partners told me: “From what we understand, about a third of all offline retail is influenced by online activity. Anyone that can better enable that or develop a proposition that drives online to offline is going to be big. We think Fantasy Shopper has a shot at being that company.”

Prescott chimed in: “The big play is ‘web to store’ – especially with the emergence of Near Field Communication in mobile phones, which is coming along. The big problem right now with offline stores is the cost of dealing with returns. ” He says that because users – women especially – can build outfits online and share them with friends first (and remember, they are encouraged to do so via the game), they are more likely to settle on an outfit they actually want to buy and keep. “Fantasy Shopper make the returns rates almost redundant.” So focusing on physical stores is a a big deal with the site.

Right now the focus is on London but it makes sense to expand quickly to New York and then LA, SF, Paris, Tokyo, Singpaore etc.

After that the startup could even be applied to the long tail of local stores and shops.

The site has over 100,000 virtual items from 40 retailers in clothes, accessories and sports goods. Users collect up to 20 “Paydays” every day, which are boosts that keep the users’ notional wallets healthy.