Bumped, a technology company that aims to reward consumers with equity in brands they frequently shop with, officially launched with 50,000 users after raising follow-on funding of $10.4 million for its Series A round, as well as closing on $5 million in debt financing.
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“We are bringing stock-as-a-reward into the market, where we already have points, cashback and other rewards,” David Nelsen, founder and CEO told Crunchbase News. “The general thesis is using stock ownership as a new mechanism for loyalty.”
Bumped’s initial launch is via a consumer app, which converts spend at 1,000 retailers into stock rewards. The company is also developing an app for enterprises that want to provide a similar reward to their employees, he added.
Backers for the Series A include Canaan Partners, Commerce Ventures, Oregon Venture Fund, as well as Valor Siren Ventures, a joint venture created by Starbucks and Valor to identify leading innovation in food and retail technology. With the latest round, Bumped has raised funding of $30 million since its inception in 2017, including closing its Series A in three separate tranches over the course of a year, one of which was $17.1 million, according to Crunchbase data.
Bumped’s new funding was used to create a brokerage so that the company could support a broker-dealer for the stock rewards program as well as the technology platform, something Nelsen described as “no small feat.”
It then launched a pilot study with the Columbia Business School and completed a data report, based on the study, to understand how the new form of reward may impact consumer behavior.
“We spent almost two years doing a formal study where we gave out 2 million stock rewards to understand what happens when someone becomes an owner in a company they shop with,” Nelsen said. “Consumers stopped shopping with competitors, and there were increases in return shopping, monthly spend and return on investment.”
In addition, the company found that when brands put out a couple of dollars in stock rewards, they received 23 times the ROI, which was “money well spent,” Nelsen added.
The global market for loyalty programs is poised to reach $201 billion by 2022, according to Beroe, a procurement intelligence firm. Meanwhile, a search within the Crunchbase database for U.S. venture-backed startups that offered a loyalty program yielded 106 companies that raised $2.2 billion in funding over the last five years.
While there are many reward programs out there, the global pandemic helped brands realize their need to get creative in building loyalty. It also provides a way for the approximately 80 percent of Americans, who don’t directly invest in individual stocks, to do so, Nelsen said.
“Bumped represents a new way for brands to help build affinity and relationships with consumers, where they literally become the brand ambassador and part of the story,” he added. “Another thing we learn is people don’t sell their stock—less than 5 percent, which shows people value feeling like they have a stake in the places they shop.”
Illustration: Li-Anne Dias