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Milestone Venture Partners leads round; joined by Correlation Ventures, Great Oaks and angels
New York-based Stray Boots announced Tuesday morning that it's raised $2 million in a Series A round of funding, led by Milestone Venture Partners, with participation from Correlation Ventures, Great Oaks and a number of angel investors.
Stray Boots is a creator of scavenger-hunt games across 14 cities, including Manhattan, London, LA, Seattle, Boston, to name a few. With the new funds, Stray Boots hopes to expand to 30 cities within 18 months, including Austin, said Avi Millman, who founded the mobile startup with his sister Noemi Millman ( CTO), and Scott Knackmuhs, who came in last year as an angel investor.
Stray Boots currently has 60 tours, which are sold for $12 apiece. The tours run for about two to three hours, so the price points is equivalent to a movie, said Millman, in an interview with me.
Since starting in 2009, Stray Boots has attracted 60,000-plus paying members, about half of whom joined within the last 12 months. Surprisingly to Millman, half of the members are not tourists, but rather locals who want something to do in their city. A typical user would be parents who want to entertain their children, couples or groups that want to do an activity together.
Millman, who got the idea while traveling in Rome with his parents and sisters, said that having played games all his life, he found reading a guidebook to be too passive of an experience. He also felt like the experience was very much like a scavenger hunt. So he and sister decided to create a scavenger-hunt-like game using SMS.
"We put together a Web-based system that would deliver challenges via text messages," Millman explained. "Our theory was that A) it's universal B) it was really simple. Text message was brilliant and allowed the customer to expeirence the cool spot." Not only was a text-based solution simple, it was cheaper to build. So the two bootstrapped the company in 2009 with $40,000 from their parents.
From there, Stray Boots strayed and bumbled a bit with their distribution plans. At first, Millman sought to get users by targeting tourist groups and youth hostels. Then he realized that most visitors of youth hostels were Europeans whose phones couldn't play his games. Then he also went to Time Square and handed out fliers. "That was a complete bomb," said Millman. What did end up working, however, was SEO (search engine marketing), and reviews on places like TripAdvisor and Yelp.
Those funds lasted to January 2011. At that point, they brought in their friend Knackmuhs who helped provide additional funds that got the young startup through to 2012.
But within that time (and startup founders should learn some lessons from this company), Stray Boots managed to generate $175,000 in revenue and attract 25,000 paying customers. Not bad for a company that bootstrapped. With that traction, Stray Boots was able to get into an accelerator program, called Entrepreneur Roundtable, which gave Stray Boots $25,000 and tons of mentorship, in exchange for 8% equity in the company. Stray Boots just graduated from the program about eight months ago.
Today, Stray Boots, which has a staff of 10, is moving away from SMS, with the launch of its first iPhone app (launched just last week).
Probably the biggest competitor is SCVNGR, which offers scavenger-hunt mobile games, and is backed with more than $40 million in venture financing.
Millman believes that Stray Boots will have its share of customers because of the quality of its tours, which are heavily researched and take about a few weeks to create. "We're keeping our [tour] quality high," said Millman.
As for the market opportunity, Millman points out that Americans take two billion trips a year. And, there's also opportunity to grab the local market in terms of urban exploration, he said. "Right now, we only get our revenue from people paying for the games. But there's a huge local advertising part of the game. because we're driving traffic into locations."
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Stray Boots was launched in 2009 by co-founders Avi Millman, Scott Knackmuhs, and Noemi Millman on the idea that exploring cities could be much more fun and engaging if it were turned into a game. Available in 16 US cities, as well as London and Oxford in the UK, Stray Boots tours provide users with challenges and clues that guide them to points of interest, creating an on-the-go adventure that works much like a self-guided scavenger hunt. The game actually teaches participants about the city as they visit each spot, so users get the information of a guided tour without the bore and limitations. Players can participate whenever they want and go at their own pace - stopping to grab a bite to eat or drink along the way.