Cause-based shopping platform SocialVest announced Thursday that it has raised over one million dollars in a Series A financing round led by Bluff Point Associates. The new round is added to a $500,000 round previously raised by the company.
Launched in September, SocialVest is a free service that lets consumers earn cash back for purchases online and in-store. That saved cash can then be donated to a charity organization.
The company has partnered with over 600 of the most well-known retail partners, including Target, Best Buy and the iTunes Store. Retailers ordinarily return from two to 10 percent of the total purchase to the buyer’s “SocialVest Giving Account.” That same consumer then chooses, via SocialVest, from over 1.5 million nonprofits in the United States, and makes a contribution.
The “social” in SocialVest comes from the company’s way of promoting donations on social networks, as a means of spurring family and friends to also contribute some cash for a cause.
“SocialVest is capitalizing on the intersection of three extraordinarily powerful forces: shopping, consumer consciousness and social media,” said Adam Ross, founder and CEO for SocialVest. “Our goal is to create a new paradigm for retail that enables consumers to spend as they would, while simultaneously supporting their favorite causes and motivating their friends to join them. We think the notion of shopping-based ’social giving’ is going to be extremely popular.”
SocialVest isn’t the only startup trying to make supporting a cause a natural background process. SwipeGood, which closed a $500,000 round back in February, is a service that automatically rounds up your transactions to the nearest dollar and donates the extra change to the charity of your choice.
Though the mission behind these companies seems pure and honorable enough, the weakness is that both SocialVest and SwipeGood are for-profit businesses. In the case of SwipeGood, that means 7.5 percent of each donation is divvied up between the startup and credit card companies.
SocialVest says it doesn’t take any portion of donations, but then how will they make money? Here's the answer from SocialVest founder Adam Ross:
We make money as a percentage of sales from the brands above and beyond the money the consumer gets. We are very much a social enterprise through and through. To quote Simon Mainwaring, the future of profit is purpose.
The new funding will be used to continue developing the SocialVest platform.