TVSmiles Closes $7M Series A To Take Its Second-Screen TV Ad Loyalty Program Beyond Germany

Berlin-based startup TVSmiles, which has built a second-screen app-based loyalty program to encourage people to watch TV ads, has closed a $7 million Series A funding round, from prior investors Ventech. The new funding brings its total capital raised to $8M.

Other investors participating in the round include international VC firm e.ventures; Berlin seed VC German Startups Group (investing for the third time); Brandenburg Ventures; multimedia software maker Magix; and additional unnamed angel investors.

Much like Shazam does for music, TVSmiles’ tech analyses the audio signature of the TV ad the phone user is watching to identify it. It then pushes additional branded and campaign content to their phone so interactions can be tracked and rewarded with virtual currency. The virtual currency (Smiles) can then be redeemed by the user against partner products/at retail brand shops.

TVSmiles was founded in January last year, and launched its service in German six months ago. Since then it says it’s booked “seven-figure campaign revenues” from companies including Wrigley, Johnson&Johnson and Mitsubishi.

While the app itself has had more than one million downloads and more than 50,000 five-star reviews. Monthly active users are between 300,000 and 400,000, with up to 100,000 daily users

Users gain virtual currency for in-app interactions associated with a branded campaign — such as watching videos or liking a company/product’s Facebook page. Since its service launched, up to several hundred million ‘Smiles’ have been collected by users of the app, and more than 50,000 rewards from Mediamarkt, H&M and Amazon have been redeemed.

TVSmiles said today it plans to use the new Series A funding to scale its business model in Germany, and also to launch into its first foreign markets this year. It’s planning to launch in “two to three key European markets in 2014” — and preparing a global launch for 2015, according to CEO Frederic Westerberg.

“The funds will be used for reaching profitability in the German market as well as launching the first international markets,” Westerberg told TechCrunch. “TVSmiles already today works with 5 out of the top 10 media agencies. Scaling the business refers to establishing TVSmiles with all media agencies and TV advertisers as a default response channel for TV advertising.”

“We are very happy to have won leading international investors for the A-round,” he added in a statement.  “This year we’d like to establish TVSmiles as the default second-screen advertising platform for all TV advertising companies and use the additional capital to launch the first international markets.”

In terms of competition, Westerberg notes that Shazam for TV targets “a similar ad market” but adds: “We feel confident to stand the competition. Already today deliver more TV-engagements in Germany than Shazam in the US!”

“TVSmiles fits perfectly to our strategy, investing in early stage companies that show great potential for international success,” added Andreas Haug, General Partner of e.ventures, in a supporting statement. “TVSmiles is a real innovation, which is quite rare in Germany.”

Haug added that the startup’s “significant traction” after only a few months also “really impressed us”.

Also commenting on the funding in a statement, Christian Claussen, General Partner of Ventech, added: “The advertising market is at a turning point. In our view, TVSmiles is in a unique position to set new standards of how companies can use TV advertising to build customer relations and measurable success”.