Promising Cash for Consumers, Startup Dosh Plans Break Out of Beta
Austin—A new startup that claims it can get consumers cash back on their purchases—and bring its customers more business in the process—has raised $2 million in new seed funding and is preparing to launch out of beta testing. Called Dosh, the company has raised $6 million in total seed funding but isn’t yet naming its investors.
Dosh asks consumers to add a debit or credit card to their account in the app. When they buy something with that card at merchants like restaurants, stores, airlines, or others that offer deals through Dosh, the user gets an automatic cash back rebate, according to founder and executive chairman Ryan Wuerch.
“Wherever you go, if there’s a coupon, it’ll attach it,” Wuerch said about the app. “We’re creating a way for brands and merchants to connect directly to consumers.”
The rebate amount depends on the deal the merchant offers—it might be $100 for a $360 hotel room, or a couple dollars for a $30 tank of gas. Dosh takes a percentage off the top of the overall deal, typically around 8 percent to 12 percent, Wuerch says.
The thrust of the business concept: Consumers get cash for deals they might otherwise miss if they didn’t have or know about a coupon, while businesses get data on customers who sign up and potential free advertising from customers who share on social media that they got cash back from a merchant, he says.
It’s by no means a new idea. Bank of America offers cash rebates for customers who swipe their cards at fast food restaurants and retailers. A Los Angeles business called Honey finds coupon codes and other deals for its users who are shopping online. Credit cards hire celebrities to pitch their cash and airline mileage offers. Other businesses have for years been using consumers to market to one another.
In fact, it’s not Wuerch’s first attempt either. His last effort, Bellevue, WA-based Solavei, filed for Chapter 11 bankruptcy in 2014 and merged with a European business as it emerged the next year. Founded in 2011, Solavei offered 4G wireless service and promised cash rewards to customers (and sometimes others) who successfully referred new customers. Solavei called it a “social business,” while others said it was akin to multi-level marketing.
One article from 2012 notes a beta user who received $650 in rewards for getting 26 people signed up. In its bankruptcy filings, published by GeekWire, the company said it wound up paying out more of its gross profit to users as commissions than expected, putting a strain on the business. The companies it operated its wireless network on, such as T-Mobile, eventually backed out of their deals.
Wuerch says he learned from the experience, which led to making Dosh different. Though the company wants its users to share their experience with Dosh to get others to use it, it doesn’t pay users based on others signing up. (Dosh does track that information and share it with users, however.) Each person who signs up gets the discount, refund, or cash-back offer regardless of those factors, Wuerch says.
Since the app has only operated in beta, it’s still too early to tell if there are any signs of problems that affected Solavei. Dosh is expecting a full launch this year. Along with the $2 million, Dosh announced … Next Page »