Karma’s Gift of Giving Model Attracts $4.5M in Funding

Karma, the app that takes the idea behind Apple’s Cards application and extends it to physical goods, has raised $4.5 million in funding from Sequoia Capital, Kleiner Perkins, and Ev Williams’ and Biz Stone’s The Obvious Corporation, among others, according to SEC documents unearthed by TechCrunch. Karma allows users to send an actual gift to any desired recipient, not just a card, and Karma handles sourcing, shipping and delivery. It’s a smart product that appeals to the busy and absent-minded who always seem to find themselves late with birthday wishes or congratulatory gifts.

The $4.5 million was actually raised last summer, but Karma is officially announcing its investors and debuting its mobile app for Android and iPhone today. The app allows users to send gifts as described above, but also plugs into Facebook to display a stream of upcoming friends’ birthdays, events and major life changes (i.e., a new job). Facebook’s birthday reminders and events are already arguably among its best and most-used features, but Karma’s idea of leveraging that into a streamlined gift-giving process is a smart move. Another wise decision is leaving shipping concerns to gift recipients, rather than gift givers; once you choose the item and a card to go with it, friends are notified via SMS, email or Facebook and prompted to enter their own desired shipping info.

At launch, Karma is U.S.-only, and Karma CEO and co-founder Lee Linden, who was previously a founding member of the Tapjoy team, said in an interview that there’s “nothing to report” in terms of international expansion at this time. But already, the company has a number of partnerships to ship products in the U.S., including deals with Jawbone, MoMA and GUND, and it also offers the option to choose a product type but leave individual choices like color and size to the gift recipient (similar to startup Wantful, which allows users to send several potential gift ideas and leave the final decision up to the recipient). Out of the gate, Karma has a revenue model and business partnerships in place, so it’s off to a solid start.

Linden told us that Karma’s plans for the funding include working on expanding its partnerships, improving and scaling the service’s backend as well as extending Karma to additional platforms. “We think we have a great launching off point with the current product and will continue to build and iterate,” he said.

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