AI Shopping Assistant and shopping network karma announced that it has raised $25 million in Series A funding led by Moretec Ventures, led by Target Global, with participation from existing investors including NFX and Altair Capital. Karma allows users to plan their next online purchase, get notified about real-time price and inventory updates, access coupons and earn automatic cashback.
The Tel Aviv-based company was founded in 2014 by Jonathan Friedman and Ronen Yuval-Hoch as a simple bookmarklet tool to help consumers save and track products. Since then, Karma has launched a browser extension as well. iOS And Android Apps. The company now employs approximately 60 people in Tel Aviv, Minsk, Belarus and the US, and has grown to include more than 30,000 retail partners such as Apple, Nordstrom, Farefetch, Target and Nike.
Karma CEO and co-founder Jonathan Friedman told Nerdshala in an interview, “Karma started with a very simple requirement: just know when something in your shape and color goes on sale in real time. ” “The idea is basically from my wife. She came to us one day and said: Why is this process not automated? We started from there, basically just knowing when the price changes and automating it for the user,” he said.
Today there are three main functions of karma. First, the service allows users to create shopping lists where they can later save the product to a universal cart. In the background, Karma will automatically notify the user if there is a price change or something comes back in stock. This function is focused on helping users to streamline and plan their purchases in one place.
Secondly, the service automatically searches the web for coupons at checkout, similar to the premise of PayPal’s Honey service. When asked how Karma compares to Honey, Friedman said that although Karma has an automatic coupon-finder like Honey, this feature is just one aspect of Karma’s offerings. He said Karma differs from Honey because it takes users on a complete pre-shopping journey and aggregates relevant services in one place, as well as showing coupons. However, PayPal’s interest in Honey these days is also about grabbing users before purchase. Its integration into the PayPal app sees the fintech company targeting buyers with personalized deals.
Friedman also pointed out that the third core function of Karma is allowing users to automatically earn cashback at hundreds of retailers. Karma offers all relevant cashback offers that users are eligible for at checkout.
“All three of these functions aim to help you automate the pre-purchase journey and save time and money. We always strive to provide users with the best value possible, but streamlining the experience is very important to us, Friedman said. “Today, you need a lot of different apps for different things like coupons or cashback, but we offer all of that in one ecosystem,” he said.
With this latest round of funding, Friedman says Karma will focus on doubling its team size within the next year. The company plans to add more features to the tool in the future and will continue to invest heavily in AI and machine learning. Additionally, Karma will focus on finding ways to grow its user base.
Karma currently has about three million subscribers and approximately 650,000 monthly active users. Its user base is growing between 15% and 20% month-on-month, and Karma users have saved a total of more than $144 million so far this year.
“The vast majority of our customers are Millennials, followed by Gen Z. I think it’s important to point out that we don’t attract the typical coupon-hunters, it’s our audience,” Friedman said. “Our audience is a high quality shopping audience because if you look at the average order value across our merchant partners, the average order value is over $100. We are extremely strong at the high end, so we can attract specific coupon audiences at all. We attract an audience that wants to shop smarter or automate a large part of the shopping journey. Obviously, no one wants to pay more so we also want to make sure that you never pay more than what you should be doing.”
For the future, Friedman said Karma is focused not only on the pre-purchase journey for its users, but also moving into point-of-sale and post-purchase strategies.
Essentially, Karma is “creating the largest shopping network in the world,” he believes, and it could become the market leader in automating the shopping experience. He added that the company plans to improve the shopping journey of users by launching additional services and features, some of which are slated to launch by the end of the year.