Tastebud, a company that builds mobile loyalty applications for retailers, has acquired SocialCrunch. Both firms hail from Chicago. SocialCrunch was a graduate of TechStars in 2013, raising $785,000 in its lifetime. The deal was an all-stock transaction.
SocialCrunch, for those unfamiliar, collected data on consumer sentiment through quizzes, allowing the firm to track trends. One report on the company called its product “gamified big data.” Tastebud itself is best known for its product StyleSeek, which TechCrunch called a “Pandora for E-Commerce” at the time of its last capital event. The company has raised a total of $1.75 million to date, making the all-stock deal sensible — given the relatively low capitalization of both firms, cash is likely quite dear.
(For whatever it might be worth, former SocialCrunch and now Tastebud denizen Alex Griffiths is someone with whom I have spent some time with in social settings, usually involving a pint or two.)
Tastebud has combined the most popular part of StyleSeek — its game to help you discover your fashion tastes — and the quiz tools of SociaCrunch, creating a mobile, white label-friendly product that it intends to sell to physical stores to help them track consumers, discover their tastes and offer them on-site deals.
Malls, to be specific. I didn’t understand it either, so I asked the company why it would go after not merely the physical realm, but the mall space specifically, which we have all read is doing somewhat poorly in recent years. Amazon, and all that.
According to Tastebud, the physical retail space is perhaps more healthy than you would think. The lesser end of the mall world is indeed having issues, the company confirmed, but the more affluent malls are doing just fine.
The company is currently working with a mall in Nebraska. It intends to expand to other locations this year, with increasing tempo. Given that I am in malls roughly never, I asked the company for data about how its product works. According to Tastebud, one “time-sensitive offer” had a conversion rate of 36 percent, which meant that “in-mall shoppers that received the offer literally went to the store and bought something.” Tastebud claims that it accumulated more than $5 million in “coupon redemptions” in its first half year at the Nebraska location.
The two questions that Tastebud faces now is when it will seek additional capital, and how quickly it can grow its customer base. It seems reasonable to think that the sales process of landing a large mall isn’t short, so how fast the firm can ramp up its sales team will be interesting to watch. And sales isn’t cheap, bringing us back to the first question.
For now, two Chicago firms have come together to bring mobile apps to old-school malls. Who wants to guess which venture firm they are going to raise from?