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This NYC Startup Just Raised $2.4M and Has a Great Tip to Share With You

 

DipJar_FITA

Let’s be honest, it’s hard to tip these days when all of your purchases are through your phone or credit card. Without spare change, tipping is just not as personal as it once was. DipJar is bringing us back to how it used to be without changing how you pay. With their digital tip jar you can dip your credit card and help out your favorite barista who gives you that extra pump of caramel in your latte. Why should the method of pay affect the stores you want to give to?

CEO Ryder Kessler tips us off for how to go back to tipping and how their own company got majorly tipped in a new round of funding.

Who were your investors and how much did you raise?

We closed a $2.4M seed round in December 2015. Our existing institutional investors Bolt and Project 11 participated, joined by Corazon Capital, Charge Ventures, Matthew Vettel of Great Hill Partners, Jamie Goldstein, and a number of other angels.

Tell us about your product or service.

DipJar enables cashless generosity via a payments and software platform built on top of tip jars and donation boxes for credit cards. DipJar is completely plug-and-play — place the DipJar on the counter and start collecting! Givers dip their credit cards to leave an instantaneous pre-set tip or donation, with their generosity confirmed by the DipJar’s light and sound display. DipJar manages the processing and disbursement of funds, while customers control the dollar amount setting and monitor their intake through the software dashboard.

What inspired you to start the company?

Years ago, I had a conversation with a barista at my favorite coffee shop about how her real wage had drastically fallen due to a decline in cash tips. She had once collected $4-$5 per hour in cash tips, and that money had gone away as customers shifted from cash to plastic to pay.

I was shocked by how much generosity was being prevented by the lack of cash in our pockets — at the coffee shop counter, coat check, valet, museum, school, church, and beyond — hurting the low wage workers and valuable causes who needed this money most.

I thought: why can’t we be generous with our credit and debit cards as simply as we can be with cash? And what insight can we glean from data about when and how much people are giving to the people and causes they care about?

How is it different?

No other company facilitates one-step credit card tipping and donating in the real world. We provide an instantaneous, opt-in, unattended way for people to be generous with the payment instrument they use for 70% of point-of-sale transactions. And we offer a full-service system to process those transactions and deliver insights to customers, from mom-and-pop coffee shops to international nonprofits like the Salvation Army.

What market you are targeting and how big is it?

DipJar services any customer who wants to enable generosity in the real world — the kind of tips and donations that would conventionally happen with a dollar bill or a ten dropped in a tip jar or collection box. Non-table-service tips are a $12B market, and individual donations to nonprofits (including both cash and other forms, like check) are a $240B market.

What’s your business model?

Customers subscribe to DipJar for an all-inclusive price of $20 per DipJar per month (perfect for people who collect all the time), or they purchase a DipJar for $199 and pay $1 per day only when they collect dips (perfect for occasional or seasonal users). We also process all of the transactions through the system, so we earn a small fee on each dip.

Are people more likely to donate using plastic versus cash?

People want to be generous with whatever payment mechanism they have in their pockets — increasingly, that’s plastic and not cash. It’s not that consumers don’t want to drop a dollar bill in the tip jar or collection box: they just don’t have the dollar bill to drop. We want generosity to be as easy and instantaneous with plastic (and, later, with other payment mechanisms) as it is with cash.

That said, DipJar highlights the best elements of generosity — the DipJar lights up and makes a sound when givers dip. This confirms the tip or donation and signaling it to earners, beneficiaries, and other consumers. Tipping and donating are social experiences, and so that celebratory confirmation helps promote even more generosity.

What was the funding process like?

We’re lucky enough to have found institutional backers like Bolt and Project 11 that have believed in DipJar from the time of our first prototype pilot tests, and so this funding round was helped by knowing we would have their support — as well as the support of early angels who continued to participate.

We talked to a number of other potential institutional and private investors, and we were very happy to find individuals and funds with payments, hardware, and social impact interest and expertise to support DipJar as well.

What are the biggest challenges that you faced while raising capital?

There are challenges to operating at the intersection of hardware-as-a-service, positive social impact (even as a company with a strong business model), and payments. There are investors for whom any one of these aspects is anxiety-inducing, and so it was a challenge to navigate that landscape.

What factors about your business led your investors to write the check?

We’ve seen that DipJar is a solution that merchants and non-profits are desperate to implement. DipJar raises top-line for donation collectors by bringing in more revenue, and DipJar improves bottom-line for employers of tip earners who want to improve service incentives and attract and retain high-quality workers. Beyond that, DipJar is a solution with strong economics and huge market potential. Further, there are tremendous opportunities to build on the transactions, relationships, and data that come out of enabling generosity — value propositions we’re only just scratching the surface of now.

What are the milestones you plan to achieve in the next six months?

We’re excited to keep growing our install base — expanding with existing large-scale customers and adding new ones — and to roll out additional software tools for merchants to add more value on top of the new earnings DipJar brings. 

What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?

DipJar has been in the making for years: I had the idea over seven years ago and we launched our first pilot tests in summer of 2012. It can be a long journey towards progress — even now it feels like we’re only at the very beginning of the DipJar story — and so it helps if you have the belief that you’re doing something essential.

That belief can be corroborated by validation from the market: build something testable and put it out in the world. That will help refine your vision and will generate evidence that will attract investors.

Where do you see the company going now over the near term?

We’ll be deploying more DipJars nationwide, rolling out additional software tools, and engineering the next version of the hardware.

What’s your favorite restaurant in the city?

There are places I love for special occasions, but you can most often find me at a few neighborhood spots in the West Village — Tartine, Extra Virgin, and Mémé for dinner; Café Cluny for brunch; and Grounded for the bagel, coffee, and chat with baristas that start off most of my days.

About the author: AlleyWatch

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