Hot off the Press – PV Invests in Drop, A Rewards App for Millennials
Plaza Ventures is pleased to announce our recent involvement in Toronto-based Drop’s $21M Series A round led by NEA.
DANNY CRICHTON, TECHCRUNCH (JAN 30, 2018)
Everyone loves free stuff, apparently including VC investors. Toronto-based Drop, whose app allows consumers to collect points for transactions they make and then receive reward offers, has secured a $21 million Series A round led by Rick Yang at NEA. The company has previously raised about $5 million in seed capital over the past year.
Drop’s concept is simple. Unlike traditional loyalty and rewards programs which are built around the retail point-of-sale system, Drop uses banking APIs to read your credit card transaction data directly, and gives you points for making purchases with partners in their program. These points can then be spent on personalized offers, such as a discount on coffee at Starbucks or a free ride on Uber.
Drop has reached as high as the second place in the lifestyle category of the Apple App Store, behind Tinder. Derrick Fung, CEO and co-founder, said the two apps are in many ways symmetrical. “We always joke that Tinder allows you to find love, and we allow you to find money,” he said. The app currently sits in the top five of the U.S. for lifestyle according to AppAnnie data. The company says that it has hit one million users late last year.
While the app may lack a brilliant twist on the loyalty concept, the real value here is in the execution. The on-boarding is simple, the rewards start immediately, and the number of brands users can gain points from is growing rapidly, and include companies as diverse as Costco, Starbucks, Forever 21, Lyft, Adidas, Casper, and Instacart.
Fung explained to me that there are three ingredients that made the app sticky for consumers. The first, was taking advantage of APIs like Plaid to connect directly to consumers rather than through retail stores. The second was to make the app, which targets a millennial demographic, more engaging. “We wanted to build something fun and that resonates with this young demographic,” Fung said. Finally, for partner companies, the app provides a channel by which marketers can understand whether their ad campaigns are resulting in actual sales.