Even Groupon investor and startup sage Reid Hoffman suggests that Wrapp could prove more effective for retailers than daily deals. "It has a similar value proposition but appeals to consumers in a very different way," says Hoffman, who invested in Wrapp's $10.5 million Series A round in January and joined the company's board of directors. "It's not saying, 'hey, my product is worth less than I charge for.' It's a different kind of marketing promotion."
Hoffman was joined on Wrapp's board by fellow high profile investor, Niklas Zennström, the cofounder of Skype (MSFT) and Kazaa, through his London-based venture capital firm, Atomico.
Wrapp is opening in the United States with 10 brands, and Winbladh says another 15 merchants will join in a matter of weeks. The company makes money by charging retailers a transaction fee and a percentage of paid cards that are gifted through the app.
Wrapp launched in Sweden in November, and more recently opened its service in the U.K. and Norway. Since then, it has amassed about 165,000 active users that have gifted more than 1.4 million cards. On average, retailers saw a lift in sales that was more than four times the value of the free cards.
Given the size and growth of the U.S. gift card market -- more than $30 billion in cards were given during the 2011 holiday season alone -- it's not hard to see why Winbladh, Hoffman and Zennström are salivating at the prospect of Wrapp's U.S. launch. Says Winblath, "We are 100% aligned with the retailer."
