Gift cards

Wrapp raises $15 million as social gifting matures

June 13, 2013: 7:30 AM ET

Stockholm-based Wrapp is locking up more funding and moving headquarters to San Francisco.

By Kurt Wagner, reporter

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FORTUNE -- Stockholm-based Wrapp, the company known for giving away gifts, is on the receiving end of a present from Sand Hill Road this morning -- $15 million in funding. Wrapp, whose app enables users to send free and paid gift cards to friends or family using a smartphone or Facebook, today announced a Series B funding round that increases the company's total fundraising to more than $25 million. Three Series A investors, including Greylock Partners and Atomico, were joined by three new investors, including American Express (AXP), in the new round.

The new financing is intended to expand Wrapp's U.S. operations, including its San Francisco office, says CEO Hjalmar Winbladh. The company plans to relocate its user-facing team from Stockholm to San Francisco, which will make the Silicon Valley office the company's largest. Winbladh also hopes to add more U.S.-based retail partners in the near future, citing the "maturity" of the U.S. market as a core reason behind the decision to expand. Wrapp already partners with retailers like Nike (NKE), Victoria's Secret, and Gap (GPS), but has other major corporations atop its wish list: Apple (AAPL), Amazon (AMZN), and Best Buy (BBY), to name a few. Wrapp users have sent nearly 15 million gift cards using the app, says Winbladh, although only 9 million have been received (users aren't able to receive gift cards if they don't have the app). Of those 9 million, roughly 18% are actually redeemed, he adds.

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The social-gifting landscape has changed dramatically in the past year, and a number of companies were acquired as the shift toward mobile payments and e-wallets took hold. Facebook (FB) purchased the gift-giving app Karma just over a year ago for more than $80 million, according to Bloomberg; LaunchRock bought (and then shut down) Giftiki in the fall, a startup that allowed users to pool their money to buy friends or family expensive gifts as opposed to numerous cheaper ones; and just last month Giftcards.com purchased San Francisco-based Giftly, a company similar to Wrapp, in order to expand its mobile presence. Where Wrapp seems to differentiate itself, however, is in the (monetary) support it has received from VCs. (Giftly, for example, had raised $2.8 million in funding at the time of its acquisition. Giftiki raised just over $1 million.) Wrapp's board also has some notable names, including LinkedIn (LNKD) co-founder Reid Hoffman, Skype co-founder Niklas Zennström, and former CEO of Eddie Bauer and H&M Fabian Månsson.

Winbladh has no plans to sell his company, which he started in his native Stockholm in 2011. Instead, he feels that the app could someday be used by retailers as a marketing tool to target possible consumers. The Wrapp application currently has a "Brand Pages" section that allows brand loyalists to receive extra gift cards or exclusive rewards. He also envisions geo-targeted campaigns in the future, where simply walking by a retailer may elicit a coupon or gift card sent directly to the user's smartphone. Says Winbladh, "There is so much left to do in this space."

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