AI purchasing assistant and Karma sales network announced that it has raised $ 25 million in Series A financing led by Target Global followed by MoreTech Ventures, with participation from existing investors including NFX and Altair Capital. Karma allows users to plan their next purchases online, be notified of real-time price and inventory updates, access coupons, and earn automatic cashback.
The Tel Aviv-based company was founded in 2014 by Jonathan Freidman and Ronen Yuval-Hoch as a simple bookmarklet tool to help consumers register and track products. Since then, Karma has launched browser extensions, as well as ios and Android applications. The company now employs nearly 60 people in Tel Aviv, Minsk, Belarus and the United States, and has grown to include more than 30,000 business partners such as Apple, Nordstrom, Farefetch, Target and Nike.
âKarma started out with a very simple need – to just know when something is on sale in your size and color in real time,â Jonathan Freidman, CEO and co-founder of Karma, told TechCrunch in an interview. âThe idea came from my wife. She came to see us one day and said: why is this process not automated? We went from there, just knowing when there is a price change and automating it for the user, âhe said.
Today, Karma has three main functions. First, the service allows users to create shopping lists where they can save a product for later in a universal shopping cart. In the background, Karma will automatically notify the user if there is a price change or if something is back in stock. This feature aims to help users streamline and plan their purchases in one place.
Second, the service automatically searches the web for coupons at checkout, which is similar to the principle of PayPal’s Honey service. When asked how Karma compared to Honey, Friedman said that while Karma has an automatic coupon finder like Honey, this feature is only one aspect of Karma’s offerings. He said Karma is different from Honey because it takes users through the entire pre-purchase journey and aggregates relevant services in one place, while also showing coupons. However, PayPal’s interest in Honey is also about capturing users before purchasing these days. Its integration into the PayPal app allows the fintech company to target buyers with personalized offers.
Friedman also pointed out that Karma’s third main feature allows users to automatically earn cash back rewards at hundreds of retailers. Karma features all relevant cashback offers that users are eligible for during checkout.
âThese three functions are designed to help you automate much of the pre-purchase process and save you time and money. We always want to try to give users the best value for their money, but it’s very important for us to streamline the experience, âFriedman said. âToday you need a lot of different apps for different things like coupons or cash back, but we offer all of that in one ecosystem,â he noted.
With this latest round of funding, Friedman says Karma will focus on doubling the size of his team over the next year. The company also plans to add more features to the tool in the future and continue to invest heavily in AI and machine learning. Additionally, Karma will focus on finding ways to grow its user base.
Karma currently has approximately three million customers and approximately 650,000 monthly active users. Its user base has grown 15% to 20% month over month, and Karma users have saved a total of over $ 144 million so far this year.
âThe vast majority of our customers are millennials, followed by Gen Z. I think it’s important to stress that we don’t attract the typical coupon hunters, it’s not our audience,â Friedman said. âOur audience is a high quality shopping audience, because if you look at the average order value with our merchant partners, the average order value is over $ 100. We’re extremely strong at the high end, so we don’t appeal to the typical coupon audience at all. We attract an audience who want to buy smarter or who want to automate much of the buying journey. Obviously, no one wants to pay too much, so we also want to make sure that you never pay more than you should, âhe added.
Looking ahead, Friedman said Karma is not just focusing on its users’ pre-purchase journey, but also plans to move into point-of-sale and post-purchase strategies.
Essentially, Karma “builds the world’s largest sales network,” he believes, and it can become the market leader in automating the shopping experience. He noted that the company plans to improve user shopping journeys by launching additional services and features, some of which are expected to launch by the end of the year.