ScoutMob Lands $3.25 Million, Teams With First Data
ScoutMob, the two-and-a-half-year-old mobile-centric deals company, has landed a new $3.25 million round to develop its technology base and add more markets. It is currently in 13 cities and has more than 1 million subscribers. The company, which had previously raised $1.2 million, also announced a partnership with First Data and will work to implement its payments technologies, which serve more than 50 percent of U.S. retail establishments.
Investors include AOL Ventures, Capitol Broadcasting (which has been very aggressive online), Cox Enterprises, Ben Lerer of Thrillist and New Atlantic Ventures. At this point, these are purely investments and do not imply integration into Capitol, AOL, Thrillist and the various Cox properties, which include newspapers, TV stations, radio stations, cable systems, Kudzu and AutoTrader.
The company stands out from the pack in many ways. Mobile is becoming more important in deals — Groupon says that 40 percent of its deals are now viewed on mobile devices — but ScoutMob also leverages the geolocation technology found in mobile phones to “check in” when deals are redeemed. With this capability, it has built a merchant-friendly model charging a flat fee for leads of $3 or $4 per lead, instead of taking commissions, which may be 30 percent to 50 percent of voucher prices.
Cofounder Michael Tavani tells us that that he sees the ad hoc investment group as “pretty good validation of the media and payment space. We’ve always considered ourselves a mobile media company, but payment is the future of this space in a lot of ways.”
Tavani says the deal with First Data is not exclusive — “no payment solution gets you all the way there,” he says. But ScoutMob intends to build on top of First Data’s payment products, including the new First Data/CardSpring collaboration on an API that would enable merchants to easily add promotions and rewards to cards with a single swipe.
Some of the more advanced concepts implicit in that technology, however, may be “three to five years away,” Tavani says. Within 60 days, ScoutMob hopes to add more immediate capabilities, including a “post-payment personalization network” that would enable rewards points for meals or miles for every purchase made within the network, he says.
Tavani also chides industry investors who are primarily West Coast based — his investors are East Coast based. “They refuse to believe that local scales,” he says. “They want to see tens of millions (of users) and this isn’t tens of millions. But local decisions are made impulsively,” adds Tavani. “And having just 13 cities lets us be super-curated at the local level. We literally have an editor in each market. Building a brand is the big thing for us.”
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This is great for ScoutMob, CardSpring/First Data & consumers. Having competitive payment alternatives is important for wide-spread adoption of live offers and this partnership should help secure an open solution and allow the market to move beyond GroupOn and LivingSocial into a more merchant friendly paradigm.