SaveWave, Formerly Upromise Grocery Operations, Spins Out from Sallie Mae with $2.3M from VCs, Angels
[Corrected, 8:35am. See below] Jeff Bussgang knows a few things about building consumer Internet companies. He’ll be applying all that knowledge to a new Boston-area company being announced today called SaveWave. Except it’s not actually new.
In a previous life, Bussgang, a general partner at Flybridge Capital Partners, co-founded Upromise, a rewards-service company that helped families save money for college while buying groceries and other everyday items. Upromise (pronounced “you-promise”) became one of the more successful Web startups on the East Coast and was acquired by Sallie Mae, the education finance company (NYSE: SLM), in 2006. Now things have come full circle.
Sallie Mae has spun out Upromise’s grocery operations as a separate company under a new name—SaveWave. The Belmont, MA-based firm says it has raised $2.3 million in Series A financing, led by Flybridge and First Round Capital, with participation from Founder Collective, IA Capital, and angel investors including Silicon Valley’s Ron Conway and Upromise’s founder and former CEO, Michael Bronner. Former Upromise execs David Rochon, Michael Libenson, and Brendaen Makechnie are leading the reborn venture; Rochon is the new CEO, while Bussgang has joined the board and will play a strong advisory role. [An earlier version said Sallie Mae is spinning out all of Upromise, which is incorrect. SaveWave will power the grocery platform for Upromise, which remains part of Sallie Mae. We apologize for the error—Eds.]
This strikes me as an interesting and unusual way of getting the band back together. It sounds like Sallie Mae, whose core business involves financing and loans, deemed it better to be an owner, strategic partner, and customer of SaveWave than actually trying to run it. So SaveWave is now a separate company focused on Web coupons and rewards, for both consumers to use and businesses to license. In any case, SaveWave’s investors clearly see a big opportunity here.
As Bussgang puts it, SaveWave’s big advantage in the online coupon and rewards sector is its national footprint of 25,000 stores and retailers. “The ability to be both local and national is totally unique,” he says.
What’s more, the company has valuable transactional data on shoppers and what they buy in stores, he says. And it is no longer focused solely on college savings—now it has opened up to the wider world of retail rebates, frequent flyer miles, and other promotions (such as daily deals). That means the company’s end-user base has grown from about 12 million households—those focused on saving for college—to more than 100 million households in the U.S.—“everyone who walks into a grocery store,” Bussgang says.
In terms of the competitive landscape, there is the loyalty-program giant Catalina Marketing (which is mostly for offline), as well as online sites like Cellfire and Coupons.com. Daily-deal and group-buying sites such as Groupon, LivingSocial, BuyWithMe, DealPop, and Tippr are also somewhat related.
SaveWave has 10 employees and will be focused for the time being on executing properly, Bussgang says. But it’s already got a leg up on most startups he gets involved with.
“The asset exists,” he says. “It doesn’t have to be built.”