Scoutmob Raises $3.25M, Partners with First Data for Local Deals

Atlanta-based local deals startup Scoutmob has raised $3.25 million in new funding from AOL Ventures, Capitol Broadcasting, Cox Enterprises, Inc., Ben Lerer and New Atlantic Ventures. The company says it will use the funding to make additions on the product side, a process that will be helped along by its new partnership with payment company First Data Corporation, also announced today.

Currently, Scoutmob is a provider of curated local deals at restaurants and businesses, which are set up by a staff of full-time editors based in the 13 U.S. markets they currently serve. It’s a model that means expansion and growth requires a slower pace than something like Instagram, which doesn’t have to deal with having staff on the ground in every market it enters, but Scoutmob co-founder Michael Tavani believes his company’s personal approach is what sets it apart from others in the space.

“We think that the only way to truly tackle local is to have a presence there,” he said. “I think there’s a lot of companies that are heavy in technology that have tried to tackle it through throwing developers at it, but we like to think that the difference is actually having people on the ground. Our brand is highly curated, and we actually want to become the local brand that consumers trust.” Tavani said that ultimately, Scoutmob wants to be as essential to a neighborhood as a local weekly, but with real-time, frequently updated deals and information about hotspots and events.

Scoutmob co-founder Michael Tavani told BetaKit in an interview that after the company succeeded in expanding its business to multiple new locations after a round of funding last year, the startup now wants to focus on adding features to its product. The new partnership with First Data will definitely help, since it offers Scoutmob the ability to close the loop, and incorporate payments for deals directly into its offer-finding and redemption platform.

“What we’re really good at right now is kind of the intent, so people use Scoutmob as a discovery or decision-making tool,” he said. “But then our relationship ends, today, right at the transaction. Closing that loop is extremely powerful, and there’s so many things that you can layer on top of that.”

Tavani said that people’s minds often go to loyalty programs when you think about what you can layer on top of payments. But Tavani doesn’t think that loyalty actually drives repeat engagement necessarily, and is planning instead to introduce some kind of more generally applicable rewards program that provides customers with points they can redeem at any local business in their area using Scoutmob.

Transactions made through First Data on Scoutmob will leverage CardSpring’s API, something that company has previously described to BetaKit as an “app layer for payment cards,” which should pave the way for exactly the kind of rewards platform Tavani describes.

Unlike Groupon, Scoutmob’s focus is on surfacing not just any deal it can in an area, but seeking out high-demand hot spots that will appeal to a young, fashionable crowd in any given neighborhood. Because it operates by word of mouth and uses on-the-ground curation, Tavani said that Scoutmob is better at bringing in repeat business than others in the space, and also noted that merchants pay only a flat fee, instead of a percentage of sales on deal transactions. Regardless of what changes Scoutmob makes to its product, Tavani said the value proposition and its angle on the local deals space will remain the same, with a strong emphasis on people that know the places they’re collecting and recommending, and less dependence on data- and machine-driven discovery.

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