Ecommerce “CashBack” Platform Fondue Raises $10.5 Million
A FinTech that’s focused on replacing ecommerce coupon codes with a more beneficial solution has just secured a significant investment. This week, Fondue announced that it had raised $10.5 million. The seed round was led by Quiet Capital and Hanaco Ventures, while other participants included Infinity Ventures, Ground Up Ventures, Sugar Capital, Starting Line, R-Squared Ventures, Gaingels, Verissimo Ventures, Samsung Next, and JAM Fund along with individuals.
With the acquired funds, the company says it plans to increase product development, expand its offline CashBack channel, and accelerate its go-to-market strategy as it looks to meet demand.
Fondue is a startup that introduced its “CashBack” platform to retailers on Shopify. Rather than offering discount codes on purchases, Fondue allows online retailers to offer CashBack deals. For example, a $100 purchase could net a customer a $20 gift card/credit. As Fondue notes, this strategy offers built-in retargeting for subsequent purchases while retaining the full revenue from one-time customers.
The company also states that, on average, CashBack offers result in 8.7% higher conversions than discount codes. Currently, e-tailers can install the Shopify plugin (which is available in the Shopify App Store) and use the Fondue service for a monthly fee of $20. However, the platform also offers a 30-day free trial.
Sharing more on the idea behind Fondue, the company’s co-founder and CEO Oren Charnoff explained, “Brands are addicted to legacy discounting strategies like coupon codes, thinking it’s just the cost of doing business. Fondue CashBack is more profitable than legacy discounting so brands enjoy a positive feedback loop of higher conversion, more profit, more LTV – money they can reinvest back into sustainable growth.”
Additionally, co-founder and CTO Dr. William Herlands noted, “Navigate to any Shopify merchant and you’ll be pummeled with coupon code offers. These are great for the simple reason that they work, but they come at an increasingly prohibitive hit to margin. One of our merchant partners put it best: ‘I give 15% codes to new shoppers, but that cuts my profit by over 40%. It’s impossible to grow profitably like that’.”
Given how ubiquitous e-commerce coupon codes are — especially for first-time customers — it’s clear there’s a potentially large market for Fondue’s CashBack alternative. Furthermore, the solution does seem like it could be an attractive option for both shoppers and retailers. With that, it’s no wonder that the company is seeing some impressive early investment as it looks to corner this growing market.