With $620K in Funding, Vouchr Launches to Help Friends Gift Local Experiences

Today Toronto and Waterloo-based Vouchr announced the public beta launch of its iPhone app to take merchants out of the local deals equation by letting users recommend a local experience, and covering all or part of the cost to provide an incentive to one of their Facebook friends to try it out. The company has raised $620,000 to date in seed funding (part of a targeted $1 million round) led by Extreme Venture Partners, and will be looking to launch the app in the U.S. in early 2013, with the app available in the Canadian App Store today.

Co-founded by Michael Humphries and Robert Balahura, whose previous social gaming platform J2Play was acquired by Electronic Arts in 2009, Vouchr wants to give people an opportunity to do more than just share a photo of the experiences they love. “The thing that sparked it was this desire that we want to be able to not just post a picture of what we love and want to share with our friends, but that we want them to be able to try it,” said Humphries in an interview with BetaKit. “Adding this additional layer of money to the application on top of the recommendation is something that really makes it compelling for friends to try the thing we’re vouching for.”

Users of the app ‘vouch’ for experiences, ranging from a yoga or dance class they want others to join to their favourite burger joint and everything in between. They then decide on the cash amount to throw in to the voucher and cast it out to their Facebook friends, with the first person to claim it on the app the only one who can redeem it. In order to claim and use the voucher, the friend has to be present at the physical location the voucher was geo-tagged for, at which point the company will send an email confirming that they received the specified dollar amount into their PayPal account.

The company is trying to eliminate the need for merchants to get involved in the process by providing integration with PayPal to create a peer-to-peer (P2P) voucher transaction, something Vouchr believes will leave it open to its users to decide on the experiences they want to share. But there are also limitations to using PayPal for this: offline merchants don’t accept PayPal, and currently PayPal Canada has a $15 minimum for transferring funds to a bank account, meaning that if someone sends a Vouchr for $5 or $10, the user wouldn’t be able to access it, plus it has a 3-5 business day waiting period for transfers $15 or over. In either scenario, users would have to pay for the item and then reimburse themselves later, and there’s no requirement to use the funds for that item, so users could just pocket the voucher money and not use it for the intended product.

Using PayPal cuts out the need for the company to partner with merchants, which is probably a good idea considering the daily deal fatigue many merchants and consumers are feeling, and the issues that might arise with redeeming a voucher at the point-of-sale. In terms of monetization, down the road the company is considering adding a small fee anytime a user creates a voucher on top of the amount they’re willing to put down, or a fee when the person claiming the voucher redeems it. Other possible revenue streams include providing insights to brands and merchants about the activity on the platform, and getting them involved in activities like subsidizing the voucher amount for their top advocates.

There are certainly no shortage of social gifting services; earlier this year, BetaKit covered Washington-based Treater, which lets friends on Facebook send gifts over the social network through a catalogue of items from partners merchants. There’s also Wrapp, which lets users send gift cards for both offline and online retailers, and Gyft, which lets people unload unwanted gift cards. Not to mention the elephant in the room, Facebook’s own gifting service, already launched in the U.S. and launching internationally in the coming months. When asked about the crowded social gifting space, Humphries replied saying that the company’s focus isn’t on being another social gifting startup, but rather the platform is meant to be a way for people to add a more tangible layer on top of their recommendations, so that instead of just saying ‘try this’, it’s ‘try this, I’m even willing to pay you to do it, that’s how much I love it.’

The company might have been smarter to target merchants who don’t want to run daily deals, but want to incent fans on social networks to try their product and actually visit their retail location. The average Facebook user likely doesn’t have enough of a vested interest in whether or not their friends try out a local business to put their own money up, especially when it’s not directed at a close friend or specific person, but rather the first person who happens to claim the deal.


Humayun Khan

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.

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