OpenSky, an e-commerce startup from veteran New York entrepreneurs, raised $6 million in a second round led by Highland Capital Partners and Canaan Partners. The round brings the company’s total funding to about $11 million.
The company helps bloggers monetize their businesses by making it easy for them to sell products directly to readers and earn a cut of the resulting sales. Bloggers choose what and when to sell; for example, it makes sense for makeup- or fashion-focused bloggers to sell clothes and cosmetics to readers that they have established a rapport with over many months or years.
OpenSky does some of the heavy lifting by signing on retailers, facilitating orders, and tracking purchases. It also uses a proprietary matching process to connect products and suppliers to the most appropriate potential seller. OpenSky splits the markup with publishers 50-50. That beats traditional affiliate marketing programs, which usually offer sellers specific fees below 10 percent of the retail price.
The company’s founder, John Caplan, was chief executive at Ford Models and head of marketing at About.com. (The other execs have strong e-commerce pedigrees, with stints at Gilt Groupe, Zappos, Bonobos and Target.) He did a soft launch earlier this month after finding 250 established bloggers willing to sell products directly to their audiences.
Caplan argues that OpenSky won’t compromise the perceived integrity of the bloggers, because they retain control over what they recommend.
It’s up to the publisher how much they might want to affect their credibility by selling products. The Federal Trade Commission moved last year to tighten regulations on product endorsements by bloggers, requiring them to disclose commercial arrangements or face possible fines. The agency subsequently backpedaled on the likelihood of fines, but the appropriate disclosures remain a confusing issue for bloggers.
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