Deals

Freshly-founded startup GroupMe raises $850k to bring group chat to mobile

Mobile application GroupMe thinks there’s money to be made in enabling group chats via SMS and voice calls from any phone in the world. And investors seem to agree. The New York based company has just raised $850k from premier investors including Betaworks, First Round Capital, Ron Conway’s SV Angel, and Lerer Ventures.

GroupMe lets you sign up for a group chat via a mobile web interface. Each GroupMe chat is given a unique number that texts you, “You just created a new group on GroupMe! Now add some friends by replying #add with your friends’ names and numbers.”

Texting that unique number sends your SMS message to everyone in the group. Users can also institute a group voice chat by calling their group’s unique GroupMe number.

GroupMe’s cofounders, former Tumblr employee Jared Hecht and former Gilt Group engineer Steve Martocci, created the product so they could have a simple way to talk to people they know in groups.

“You don’t need to learn anything new to use GroupMe,” Hecht said.

The product was created during May’s Techcrunch Disrupt hackathon, where I first met the team. Martocci was introduced to me and a group of people by entrepreneur Ed Kim.

As we took part in the first GroupMe chat outside of the core team and close friends, it quickly became clear that people were excited about the product.

Several times during the conference I noticed Kim introduce Martocci to a group of investors and entrepreneurs. They would immediately surround Martocci with their phones out in front of him as he showed off his weekend’s work. The funding round was extremely competitive, with a number of venture partners telling me that they tried and failed to get into the deal.

GroupMe has since hired three employees, with Martocci leading the product team and Hecht taking care of business matters. While mobile apps are in the works, the company is building features that will work on feature phones as well, in order to attract the widest possible audience.

“We’re coming at this space from the lowest common denominator up,” Hecht said. “We want stuff that works on every phone, and we want to build on top of that. Most people start with smartphones, but we’re building from the bottom up.”

The GroupMe team believes that by giving people a way to talk to groups of people they know, the service will attract a larger following.

“My brother has no interest in using Twitter, but he loves this because he’s interacting with people he knows,” said Martocci. “He lives in the suburbs and he’s looking to figure out where he’s going tonight.”

I saw this first hand as GroupMe founder Hecht used the app to organize his friends as they barhopped in a rented bus to celebrate a friend’s birthday. After they arrived at each bar, group members dispersed to different sections in order to get a drink. Using GroupMe they were able to discuss where to go next before Hecht ordered everyone back on the bus.

GroupMe will eventually be able to monetize conversations like these with contextual advertising that could perhaps suggest the group’s next destination.

While it is currently only available in the US, GroupMe’s compatibility with feature phones presents a significant opportunity in markets with lower smartphone adoption rates. The company is working with Location Labs to add location capabilities to the service.

GroupMe is currently in Alpha, with the beta expected to be ready within the next couple of months. The company plans on quickly developing the service while soliciting feedback from users.

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