With more than $500 million in financing raised to date, 13 million active users and around 720 employees, Madison-based Fetch Rewards runs a fast-growing consumer rewards app and digital marketing platform that gives users free points for uploading receipts and brands access to valuable consumer insights.
The company announced Thursday it raised its latest $240 million at a valuation upwards of $2.5 billion after making history last year by becoming the first startup in the state to raise capital at a valuation greater than $1 billion, according to a 2021 Wisconsin Technology Council report.
Wisconsin Inno talked with Fetch Rewards CEO Wes Schroll about what it's like to be a leader in the state's startup community, the company's business model and his thoughts on an exit plan.
The interview has been edited for clarity and length.
How does it feel to be leading what is arguably one of the most successful startups in Wisconsin right now?
"It comes with a huge sense of pride. When I was going to school at the University of Wisconsin-Madison, we believed that there was a vibrant startup community, but... other than Epic, which has been, obviously, an amazing story, none of the hyper-growth-type companies have broken through the billion-dollar barrier and beyond.
"We've always thought that would be super helpful in attracting future funding for other companies and raising up other entrepreneurs within the community. We think these types of things spin off plenty of other companies that are going to go on and be really productive. So we're incredibly proud that we're able to pave the way and show that it can be done based out of Madison."
Does it weigh on you, as well?
"As we continue to grow, we've actually been able to even hire a person that's focused on all of our efforts to give back to the communities that we're based in because I do feel a sense of responsibility for both employing as many folks as we can as we continue to grow within Wisconsin ... but also just trying to find a way to raise all ships. ... I don't think it weighs on us all that much. I think we embrace it."
What's the company's strategy for achieving its goal of further penetration in the U.S. market?
"Our biggest source of new users actually comes from our current users. So between our organic and our referrals, where a user tells another user about the application, that is the single biggest channel of growth for us.
"We've introduced new things like a social feed, where you can actually connect with friends and family, you can challenge each other (for) who can earn more points, you can work together to actually unlock even more point-earning opportunities. ... Since then, our referrals and our organic have actually been increasing to the highest levels the company's ever seen, so we've actually been pulling back on some of our direct media spend.
"We plan to continue to double-down on improving the product. We think if we can deliver a great experience consistently, our referrals will continue to increase, the organic will increase because it's a product people like talking about."
How does Fetch Rewards make money?
"For our consumers that are using the application, it's a free app that saves them money — hopefully, they have fun while doing it — and it gets smarter over time to help them save more and more.
"On the advertiser side — the brands, the (consumer packaged goods companies) we work with, the retailers, the restaurants — what they're always looking to do is be able to connect with consumers and try to win their loyalty and win their incremental purchases so when you're sitting in an aisle — for example, choosing between Puffs versus Kleenex — you maybe are feeling like, 'I know if I buy Kleenex I'll get rewarded for it, so I'll go ahead and buy Kleenex.'
"So the brands pay for the Fetch points they're offering, so every time you're buying Kleenex, that consumer is now getting rewarded with Fetch points. ... We basically are charging (brands) for helping them to move incremental sales, we give the lion's share of what they pay us to the consumer in the form of points, and then we keep a portion of it."
If consumers can upload receipts from any purchase to earn points, what's the incentive for advertisers to partner with Fetch Rewards?
"You're going to get a base level of points — call it 25 points — every time you submit a receipt. ... That's really important for us because it reinforces consumers to not forget about the application and associate us every time they have a receipt.
"We actually look at the information that comes off those receipts to then go and connect you with companies. In that example, you may have submitted a receipt and earned 25 points because you bought Puffs facial tissue. But next time we'll tell you, 'Hey, if you buy Kleenex, we'll give you 2,000 points.'"
How close is Fetch Rewards to profitability and when do you expect to get there?
"There's a reason why we're raising equity financing. It's because we believe that, right now, we're getting very efficient returns for the incremental monthly losses, where it's almost all coming in the form of incremental marketing spend that we're doing to grow the user base faster than its natural organic rates and to invest in product development that we think will pay for itself multiple times over in the years to come.
"I'd say we're choosing to stay in a state of investment and growth but I think you'll see us in the not-too-distant future be profitable."
What is Fetch's exit plan?
"Honestly we've never really focused on that much. ... We have no pressure from any of our investors over the last five years to be looking for any sort of liquidity event ... and I think our teams here are also so bought into the growth that we can deliver and the value we're creating right now that no one's really looking for an exit opportunity."
