Few dislike getting a gift. Now venture capitalists are betting that corporations will increasingly use it as a strategy to cultivate relationships with clients and employees alike—and that it will be enough of a logistical headache that they’ll need software to sort it all out.
Buoyed by a surge in corporate gifting amid the pandemic, Snappy, a maker of software for companies to send gifts en-masse to employees and customers, raised $70 million in funding, the business announced Wednesday.
As office work moved into homes, so did the act of sending thank-you gifts to cement client relationships or end-of-year perks—such as a bottle of wine—to employees. While the company declined to give specific revenue and valuation figures, the Series C round of funding, financed by investors led by GGV Capital, comes after the New York City-based business grew revenue by 800% in 2020 and roughly 400% the year prior.
“We’re seeing a shift to digital,” says Snappy CEO and co-founder Hani Goldstein, seeing the recent surge in online gifting as the early innings fo the industry. “The majority of corporate gifting is still being done offline.”
Snappy works by taking into account a company’s gifting budget and shows the customers or employees a selection of gifts that fit into those parameters. That selection, which can depend on the geography of the receiver, can include camping gear, electronics, and digital subscriptions. Snappy also allows the company to automatically send out gift option cards based on dates such as an employee’s birthday or work anniversary.
By offering a selection of gifts rather than outright handing an employee a gift card, Snappy saves companies an estimated 20% as they are not charged for unclaimed gifts, says Goldstein. And in some cases, employees may select a gift that falls below the company’s budget.
Snappy charges a 15% fee for every gift, in addition to a subscription fee for each company, but Goldstein says this form of gifting still cuts a smaller hole in the company’s wallet.
E-commerce has already made it easier for consumers to buy and gift goods to friends and family. But venture capitalists are betting that doing so to multiple addresses with people with varying preferences is creating enough of a headache that businesses are willing to pay to simplify the process.
And Snappy isn’t the only one trying to solve the issue. In early May, a company called Goody raised $13.1 million in Series A funding led by New Enterprise Associates. That same month, Dublin-based &Open announced a $7.2 million funding round from First Round Capital and LocalGlobe. Not to forget Alyce, that raised $30 million in April, that is looking to cut down on corporate swag at events or Sendoso, which last raised $40 million in February of 2020.
As with many startups that have received the pandemic boost, the question is: How much of the habit will stick? With the new capital from investors including 83North, Saban Ventures, and Hearst Ventures, Goldstein is certainly betting that it will not only stick, but grow: The company plans to more than double the headcount to 300 over the next year.
As for GGV Capital managing partner Hans Tung, who will join the board of the company, he believes the corporate gifting startup world will be large enough for several players to be in the space especially as more companies approve remote working situations over purely in-person offices.
And perhaps in the future, the investor who has made bets on consumer-facing companies such as Peloton and Wish, says he could see Snappy branching into consumer-focused transactions too.
“Gifting is an inherently massive business,” he says.
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