Shopkick funding shows real world mobile trend

Shopkick, a Palo Alto, Calif.-based startup that tries to get people to use their mobile phones to go shopping in the physical world, raised $15 million in a Series B round this month.

The company—which has partnered with Macy’s and Best Buy and is working on an iPhone app to help turn offline shopping stores into interactive worlds—is one of several VC-backed startups that have found ways to use mobile phones to get people away from their desktops or laptops and engage in activities outside the house.

“It allows you to get rewards and personalized offers and entertainment using your smartphone at a physical store in completely new ways,” says co-founder and CEO Cyriac Roeding.

He adds that he traveled worldwide to study how people use mobile phones. In Bhutan, he says he learned that the cell phone is their computer there. “They do a lot of things there besides texting and talking,” he says. “It’s a pocket calculator. They add up revenue when they sell vegetables at the local farmers market. When you see five monks on the ground, they’re either playing a game with coins or listening to ring tones on their cell phones.”

There are at least half a dozen other companies that offer variations on Shopkick’s theme.

Competitors include SCVNGR Inc., which uses mobile devices to conduct scavenger hunts, and has raised $825,000 from Highland Capital Partners and six other undisclosed investors.

Shopkick’s funding was led by Greylock Partners and represents the first investment for LinkedIn Chairman Reid Hoffman since he became a partner at the venture firm last year. Hoffman was already an angel investor in Shopkick and has joined the startup’s board following the Series B round.

Joining Greylock in the round are Kleiner Perkins Caufield & Byers, Citi Growth Ventures & Innovation Group and SV Angels. The company previously raised $5 million in funding.

“I reached out to Hoffman years ago,” Roeding says. “I found what he was doing at LinkedIn extremely interesting. I thought he must really understand consumer virality. We’d done viral work in Europe in mobile, but nobody had done anything like that before.”

Also, Shopkick backer Kleiner Perkins has funded yet another company in this space: Booyah, a gaming company that offers a real-life version of a Monopoly-like game called “MyTown,” in which players claim and “buy” properties, collect rewards and charge their friends rent.

In May, Booyah raised a $20 million round led by Accel Partners, and including Kleiner Perkins and DAG Ventures, with Accel Partner Jim Breyer joining Booyah’s board. Booyah has now raised nearly $30 million since its inception.

“Our goal was to leverage smart phones that use GPS and cameras to validate the activities you do in the real world and couple that with experience in interactive entertainment,” says Booyah co-founder and CEO Keith Lee. “It’s not just a game that’s stuck on your plasma TV at home, but an experience that’s truly out in real world, so you do stuff socially, like go to Golden Gate Park or work out together, as part of fun gaming.”

Shopkick and Booyah are also both part of Kleiner Perkins’ iFund, a $200 million vehicle that the firm launched two years ago to create products for Apple’s iPhone and now iPad devices. (Kleiner Perkins launched the firm with $100 million and added another $100 million for the iPad in March).

Roeding and Lee and the other iFund portfolio CEOs meet regularly with each other and with Apple executives, although Roeding says that he expects to offer an Android version of Shopkick a couple months after the iPhone version launches.

So far, the iFund has had no exits, but Matt Murphy, who heads the iFund and brought Roeding into Kleiner Perkins as an entrepreneur in residence, says there have been no down rounds for iFund companies.