Fetch Rewards’ pivot seems to be paying off. The Madison, WI-based mobile app startup has pulled in $25 million from investors to help it capitalize on a surge of new users and business partners.
The fresh funding was revealed in a document filed this week with the SEC. The money comes from Greycroft and E.ventures, Fetch Rewards CEO and founder Wes Schroll tells Xconomy. The deal brings Fetch’s total venture capital haul to nearly $50 million, he says.
Fetch developed a mobile app that lets grocery shoppers scan paper receipts and earn points that can be redeemed for electronic gift cards at retailers such as Amazon (NASDAQ: AMZN), Macy’s (NYSE: M), and Sephora. Points are awarded when users purchase eligible products sold by one of the brands that Fetch works with, which sell everything from potato chips to body spray to beer. The startup claims that the program works with receipts from any grocery store, convenience shop, drug store, club store, liquor store, gas station, hardware store, or pet store.
Fetch wasn’t the first to have this idea—it competes with other free apps such as ReceiptPal and Ibotta, and is similar to the rewards programs many credit cards offer. But Schroll says Fetch’s app is catching on; the company added more than 100 brands to its rewards program this year, and 2 million-plus new users of its product, he says.
“We closed this growth round to help expand out our teams to be able to support the massive user growth we have experienced this year,” Schroll says in an email message. He adds that the company plans to expand its team from 110 to at least 220 employees by the end of 2020, with many of the hires in engineering.
Fetch introduced the rewards app in February 2017. It later phased out its first product, an app that enabled consumers to scan grocery items’ barcodes as they shopped and earn discounts at checkout. That app not only aimed to help shoppers save money, but also streamline the checkout process. According to a Forbes article from August 2017, the system was available to shoppers at roughly 50 stores at that time, with another 120-plus stores planning to begin offering it in fall 2017. But Fetch apparently saw more promise in its newer rewards app and decided to focus all its efforts on that product.
Schroll hasn’t responded to an inquiry about why Fetch scrapped its original app. It’s possible that the app was more difficult to implement and scale up. It required forming partnerships with grocery stores, and launching the system involved setting up a special checkout lane for Fetch users. The rewards app doesn’t require that infrastructure or close relationship with each store. Fetch says the newer app is compatible with any store because the company works directly with brands to offer users the rewards.
Furthermore, the business model change means Fetch is no longer competing with much bigger companies working to revamp the in-store shopping and checkout experience—including Amazon and Walmart (NYSE:WMT).