27 Oct Online retailer Jellyfish.com lands $5M in funding
Madison, Wis. – Jellyfish.com has secured $5 million in a funding round led by Kegonsa Capital Partners and Clyde Street Investments, LLC.
The funding will allow Jellyfish to ramp up customer adoption of its new comparison shopping search engine. In conjunction with the funding, retail industry veteran Ralph Dillon, managing member of Clyde Street Investments, will join the Jellyfish Board of Directors.
Jellyfish has gained traction in online retailing with a shopping search engine that shares advertising dollars with consumers and attempts to eliminate click fraud for advertisers.
The company launched the first beta version of its new shopping service in June 2006 after receiving an initial seed round of investment from its founders – CEO Brian Wiegand and President Mark McGuire – and Kegonsa Capital Partners.
“We raised our initial round to flush out the new Internet advertising concept, and kind of get mind share for the idea,” Wiegand said, “and now the second round is oriented around building a team and executing a plan for customer adoption.”
Jellyfish is pioneering the Value Per Action (VPA) model, which it characterizes as a “Robin Hood-like search engine” that takes a percentage of the revenue customers generate through their buying habits and gives back 50 percent of it.
Wiegand said the company would not attempt to drive customer acquisition through price-per-click advertising, which currently is the most prevalent advertising model on the Internet. In the United States, about $250 billion is spent on advertising on an annual basis, and much of it comes in what Wiegand called “interruptive” forms of advertising like pop ups, spam, and even commercials.
In VPA, the company believes it has invented a new and better form of Internet advertising. “You won’t see us buying Google ad words to drive traffic,” Wiegand promised. “So if we’re not going to be doing that, you’re going to see a number of really cool, innovative, interesting offerings oriented around bringing the customer into the advertising equation. So anything we do in the form of advertising, we’ll give the customer some value as well.”
To earn cash back, prospective customers sign up to establish an account with Jellyfish. The initial goal of the four-month-old company is to reach one million active shoppers within the first year, but thus far it has not actively marketed the service.
“The viral components, the interestingness, the name, and people telling friends about us is really working quite well, more than expected,” said Wiegand, who noted the company has tripled its sales since June.
Also as a result of the funding, Jellyfish, which employs 20 people, expects that number to grow to between 30 and 40 by the end of 2007.
Explaining why Jellyfish is an attractive investment, Ken Johnson, managing director of Kegonsa Partners, cited the company’s disruptive business model and the track record of its founding management.
“We are extremely pleased that the Kegonsa fund is able to provide an innovative company like Jellyfish with a solid alternative to the traditional venture capital investment,” Johnson said in a release.
Dillon, who called Jellyfish a “hard-hitting e-commerce innovator” with immense growth potential, brings more than 35 years of industry experience to the Jellyfish board. Prior to joining Clyde Street Investments, Dillon was CEO, president, and chairman of Cost Plus Imports, Inc., a retailer of casual home living and entertainment products.
Wiegand said Dillon’s depth of experience in the retail industry and his track record with high-growth companies will be valuable as Jellyfish accelerates its sales efforts. “He has an insurmountable amount of experience in the retail area, which is one-half of our equation – getting retailers to participate,” Wiegand said.
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