July 15, 2010, 4:20 PM

Mobile rewards app provider Shopkick lands $15 million in funding

Shopkick will use the cash for location-based mobile apps for companies like Best Buy.

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Shopkick, a start-up company that plans to launch this summer mobile phone apps that reward shoppers and present them offers based on their location, has received $15 million in funding.

The Series B funding is led by Greylock partners and supported by Kleiner Perkins Caufield & Byers, Citi Growth Ventures & Innovation Group, and Silicon Valley angel investment firm SV Angel. The investment follows shopkick’s $5 million in initial funding from KPCB and Reid Hoffman, who then invested as an individual but is now part of Greylock Partners.

Shopkick says it plans to use the funds for development of its upcoming location-based mobile rewards app and to sign up new development partners for it. It’s already signed several big-names including Best Buy Co. Inc. and Macy's Inc.

Shopkick launched in late 2009 its first mobile app, CauseWorld, a charity app supported by companies including Procter & Gamble Co. and Kraft Foods Inc. With CauseWorld, shoppers earn Karma points by walking into a store or restaurant and virtually checking in through the app on their phones. No purchase is required and when a consumer earns enough Karma points, she can cash them in for charitable actions, from planting a tree to caring for an injured animal. Sponsoring companies have provided nearly $1 million for consumers to donate to their chosen charity from a specified list, shopkick says.

“Shopkick is the most interesting play in mobile retail that I’ve seen in months,” says Julie Ask, a vice president and principal analyst at Forrester Research Inc. who follows m-commerce. “It will go well beyond Foursquare, Gowalla and the rest. They have really smart retail, consumer packaged goods, consumer electronics, and health and beauty companies interested. I’m not sure how much they are talking about publically, but shopkick is one to watch.”

Foursquare and its competitor Gowalla are geolocation-based mobile check-in apps that tell friends and other app users they have arrived at a place, such as a restaurant or store. App users compete against each other for the most virtual check-ins at the most places for street cred and discounts. In May, Foursquare said it had an average of 600,000 virtual check-ins per day.

Shopkick is one of a growing number of start-ups looking to monetize location-based technology in phones. In addition to shopkick, Gowalla and Foresquare, another company called 1020 Inc. provides Placecast geolocation technology to offer opt-in text message alerts—such as discounts and offers—for nearby stores.

Investors seem to like the mobile location concept. Foursquare received $20 million in Series B Funding late last month—$4.63 million of which went to founders—and Placecast received $3 million in series B Funding in March, following $5 million raised in November.

Investors are warming up to apps in general. The initial KPCB investment in shopkick was through the firm’s iFund initiative, a $200 million venture capital investment created to fund  innovators developing applications, services, and components for Apple’s iPhone and iPod Touch platform.

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