Rewards network Kiip announced today that it closed $11 million in a second round of investment. The funding will go towards expanding Kiip’s rewards system beyond gaming, infusing ‘moments of happiness’ into everyday life.
Kiip works with game developers, brands, and users to reward gaming achievements with tangible products. Rather than earning points with no real-world value, players unlock Kiip rewards, which could be anything from a can of Pepsi to a Best Buy gift card. This model enables developers to ramp up engagement and excitement within their game, puts brands in direct contact with a large market of consumers, and makes players happy because their achievements are rewarded with actual prizes.
Founder and CEO Brian Wong is most notorious for his youth. He was just 19 when Kiip raised $300,000 in preliminary funding, most likely making him the youngest person ever to receive venture capital funding. Wong graduated from college at 18 years old with a degree in business. He moved to San Francisco to work at Digg but was laid off five months later. Instead of moping, he started a company.
“During my hiatus, I was traveling quite a bit on long-haul flights,” he said. “I did an ‘aisle creep’ and noticed that no one was being productive on their phones; they were playing games. All games have achievements, and what if in these powerful moments, you give people an extra hit of dopamine by rewarding them with something real?”
In April of 2011, Kiip raised $4 million led by venture capital firm True Ventures and continued to grow. What began with 10 games and 10 brands now involves 400 apps integrated into the system, 40 million monthly unique users in the US, and about 100 million moments of happiness every month.
Kiip is also evolving as a product. Initially, Kiip scouted out independent developers and asked if they wanted its code. The company switched to a self-service model earlier this year and opened up the network to anyone. $100k went into a developer fund to fuel this effort, and significant momentum began to build.
After meeting such success within the gaming world, Wong saw the opportunity to expand into other markets.
“We realized achievements don’t only exist in games, they exist everywhere. You can reward anything you do inside of your phone, it is part of everyday life. Rewards for everyday life — that statement has become a lot more real.”
The influx of capital will go towards fueling this wider perspective. Kiip will begin rewarding experiences, which will please brands and users alike. As an experiment, Kiip forged a relationship with fitness app Map My Run and Pepsi’s Propel water. Runners track their miles using the app and can unlock rewards for their efforts.
There are no set benchmarks for unlocking rewards, so users do not know when one is coming. One runner could get a prize after 5 miles, and another after 7. This notion of ‘serendipitous rewards’ is new to the advertising world and preserves the element of surprise, as well as internal motivation. It also taps into human nature’s proclivity for instant gratification.
Brands that participate with Kiip’s rewards network have a range of options for how their products are integrated into the games. There are currently 32 different types of reward mechanisms, and brands can offer anything from actual products to redemption codes.
Innovation in marketing strategies and solving the mobile monetization conundrum are two major secrets of Kiip’s success. Banner advertising and traditional display mechanisms can be frustrating for users, whereas unlocking a Kiip reward is a positive experience.
“Brands pay to be a part of these moments,” Wong said. “Advertisements are the connection brands make with a consumer, and we isolate this connection and make it much more powerful. It is intimate and about love. No one will ever love an ad, but it is easy to love a reward.”
Wong will continue to think outside the box with $11 million in his pocket. He plans to enhance the technology to get the right reward to the right person at the right time. The money will also go towards doubling the team, which currently consists of 30 people. The round was spearheaded by Relay Ventures with participation from previous investors True Ventures and Hummer Winbland.
Kiip was founded in September 2010 and is based in San Francisco with sales offices in Chicago, LA, New York, and London.