Last updated on June 7th, 2021 at 11:01 am
When investor John Philosophos first met Wes Schroll, the now-founder and chief executive officer of Madison-based Fetch Rewards Inc., he was a young undergrad at the University of Wisconsin-Madison.
The two struck up a conversation during an entrepreneur networking event. Philosophos, a partner and advisor at New York-based Great Oaks Venture Capital, remembers Schroll sharing some rough ideas for a few different business concepts, including one that sought to disrupt the grocery shopping experience.
“He wanted to know what I thought his next steps should be,” said Philosophos. “So, I gave him a little checklist of things and never thought I’d see or hear from him again.”
Schroll showed up the following month with a completed checklist, asking Philosophos for more suggestions. First: find access to capital.
Fast forward about nine years, Schroll sits at the helm of a fast-growing startup, now known as Wisconsin’s “unicorn” – a status held by about 600 privately held startup companies around the world that have cleared the $1 billion valuation threshold.
Great Oaks was one of Fetch Rewards’ first institutional investors, providing about $750,000 in early capital. It was a high-risk move, but the firm had its money on the founder.
“(Schroll) had what we perceived to be the makings of all the right stuff for a founder of an early-stage company. …,” Philosophos said. “Early stage is all about the founding talent. You rarely start with the right vision, but if you’ve got the right founder, you’ll iterate to it.”
Fetch Rewards launched its consumer-loyalty and retail-rewards mobile app in 2017. Users scan any paper or electronic receipt in exchange for points that can be redeemed for free rewards, such as digital gift cards for retailers and restaurants, donations to charity, sweepstake entries, and other discounts.
Fetch has partnered with more than 500 national brands like PepsiCo and General Mills that reward users with additional points for every dollar spent on their products. Essentially, those brands bid on exclusivity to incentivize shoppers to choose their brand over competitors’.
“We don’t get people to magically just buy more products and stuff that they don’t need,” said Schroll. “All we’re trying to do is help (shoppers) on areas where they’re flip-flopping and don’t necessarily have huge amounts of loyalty to one brand or another to start to centralize on the brand that’s willing to reward them and prove that the brand is loyal to you as a consumer.”
The idea of consumer loyalty was the spark that ignited Schroll’s vision in the first place. A young college student learning to shop for his own groceries, Schroll was put off by the hoops he had to jump through to be rewarded for his existing spending habits (think coupons and multiple loyalty programs).
“I thought that was fundamentally backwards,” he said. “If a brand or retailer really cared about me, and cared about proving that, then they should jump through the hoops and prove that they’re loyal to me as the consumer.”
Fetch Rewards has amassed more than 7 million monthly active users and has processed nearly one billion receipts, delivering more than $120 million in savings to shoppers.
Receipts provide insight into new buying trends and where consumers are looking to be rewarded, and Fetch leverages that data to onboard additional brand partners, said Schroll. The company is currently working to add more restaurant chains after seeing an influx of restaurant receipts now that consumers are becoming more comfortable dining out.
Fetch experienced a growth spurt during the COVID-19 pandemic as consumer behavior shifted – shoppers made fewer but larger grocery trips, stocked up on essentials, and attempted to save money. Once early supply chain disruptions settled, Fetch’s brand partners stepped up and rewarded shoppers with more points – both as a thank you and to help customers save more.
“That really helped us,” said Schroll. “It helped accelerate the user growth, it helped accelerate how much people could earn on the program.”
And ultimately, it fueled the startup’s momentum to raise $80 million in November from existing shareholders ICONIQ and DST, followed by an additional $210 million in April from SoftBank Vision Fund 2, with participation from ICONIQ and DST.
These days, Fetch is focused on three main opportunities: expanding rewards categories beyond grocery, reaching more U.S. households, and eventually, introducing the brand to international markets.
That all requires growing the team, said Schroll. Currently, the company has 460 employees in 36 states, with plans to aggressively hire in the second half of the year. Fetch currently occupies one physical office space in Chicago. Use of its Madison office was donated to Girl Scouts of Badgerland Wisconsin. In response to recent employee interest, Fetch plans to one day open physical office space in many of its hub cities.
Despite its national scale, Fetch’s roots are planted in Wisconsin, which goes to show that the ground is just as fertile as it is on the East and West Coasts. To that end, Fetch stands on the frontlines of Wisconsin’s startup ecosystem as a point of reference for both entrepreneurs and venture capital firms looking to grow and invest here – to show that it can be done, said Schroll.
“We still have a long way to go to keep raising the bar, and then hopefully that space underneath is what can be filled with all the other great companies and entrepreneurs looking to start something,” he said.
Now with a “unicorn” to its name, Wisconsin is poised to catch the eye of more outside investors, said Tom Still, president of the Wisconsin Technology Council. That’s important for an ecosystem that continues to rely heavily on out-of-state money due to a lack of large-scale VC companies.
Schroll, himself, secured most of Fetch’s early funding by traveling across the U.S. to participate in various pitch competitions. At the time, said Still, the young entrepreneur’s vision probably didn’t resonate with most Wisconsin investors who simply weren’t familiar with the retail-rewards space. But that didn’t deter him from tapping Wisconsin’s talent pipeline and business landscape.
“Like any company that grows, (Fetch) wants to be doing business in other states and other countries … but at the same time, it’s kept the core of the operation here, and that’s a strong message for Wisconsin,” said Still.
Needless to say, Great Oaks Venture Capital is “very pleased” with its early-stage investment in Fetch, said Philosophos. The firm’s 200-company portfolio includes a handful of Wisconsin brands, like Eat Street and Moxe Health, both based in Madison. Of the 10 unicorns in the portfolio, Fetch remains one of its “more significant positions” – a shining star.
Philosophos hopes Fetch’s success story will move Wisconsin investors to take more risks on visionary entrepreneurs and early-stage ventures.
“There were several points along the way that Fetch could have failed, but the bet we made on Wes was validated because he navigated his way around those points,” he said. “Great Oaks helped him through some of those tough times – you need that kind of sponsorship.”