Swoopo raises $10M more for “entertainment shopping”

April 2, 2009 | Anthony Ha | Comments | |

Swoopo, an online auction site that claims to offer great deals and high entertainment value, has raised $10 million from August Capital.

The company is headquartered in Cupertino, Calif. and has a rather different approach to auctions. Instead of presenting a free-form bidding environment like eBay, Swoopo follows a very specific procedure — every item starts at 15 cents, and each bid increases both the price (in 15-cent increments) and, if you’re coming down to the wire, the time left to bid (by 20 seconds). Oh, and you have to pay 75 cents for each of those bids.

This model was criticized as being rather scam-like on various sites because you can end up spending lots of money on bidding fees without actually buying (or “winning”) anything. But Howard Hartenbaum, a general partner at August, says the fees ensure people are serious about their bids. That, combined with the potential for snagging devices like the Ninetendo DS and Amazon’s Kindle for very low prices, gives Swoopo an exciting feeling, more akin to a live auction than eBay, he says.

“My opinion of the U.S. market is, we have a big retailer called Amazon, and we have eBay, but we don’t have any kind of place to be entertained while shopping,” Hartenbaum says.

I have to admit, the idea of “entertainment shopping” isn’t one I get too excited about, but when I recall the number of people I know who get excited about deal-hunting, it’s obvious that I’m in the minority here. Swoopo says it has already built an audience of 2 million registered users in Germany, the United Kingdom, Austria, Spain and the United States. It previously raised $4 million from Wellington Partners.

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About the Author, Anthony Ha

Anthony is VentureBeat's assistant editor, as well as its reporter on enterprise technology, cloud computing, and tech policy. Before joining VentureBeat in 2008, Anthony worked at the Hollister Free Lance, where he won awards from the California Newspaper Publishers Association for breaking news coverage and writing. He attended Stanford University and now lives in San Francisco. Reach him at anthony@venturebeat.com. You can also follow Anthony on Twitter.

  • WOW, I've always said it many time before and this new new auction system proved it, People are idiots when it comes to math. I just watched Swoopo sell a Nintendo DS that anyone can pick up at Walmart for $140.00 plus state tax, for about $290.00(That is the selling price plus their .75 per bid fee)!!! Genius!!! People are sheep and people are fools! Best of luck Howard Hartenbaum, as David Hannum said "there's sucker is born every minute"
  • One thing I don't understand about the Swoopo model:

    It seems as if they're printing cash. I mean, by standard start-up standards they're VERY profitable. So why raise more funds? Can't this business capitalize itself?

    Regardless, I think it's an interesting business model and it'll be interesting to see where it goes.
  • Jason
    Luciano, People are idiots? The people that use swoopo are, there are swoopo clones out there now that have the same stuff swoopo does without all the bidders. I visit those sites and get great deals, the newer the site the better, well off to Bidzooks!
  • You're actually correct Jason, sites with basically the same mechanics as this one are continually growing in numbers and you'll get a much better deals too because you won't be up against many bidders. People just need to read the manuals for the bidding systems first before participating in the bids.
  • Love Swoopo?

    You will Love This...

    http://www.Vabang.com
  • Right now there are so many competitors in this space but a few of them are getting the venture capital to market themselves. We may see some consolidation and/or fall of over the next few years. It will be interesting to watch. Until then, go find a new and upcoming penny auction site with little to no traffic so that you can score great deals. Don't forget to read reviews about them first to make sure they are on the up and up.
  • Indeed! There are so many who try to enter this industry with little intention of running a legit, and honest website. Many of them eventually fold. In the end, the true, and tested penny auction sites will remain. Hopefully few in number.
  • Also, a good resource to keep up to date on the penny auction sector is www.pennyauctionwatch.com