Social Reviews Startup Yotpo Secures $10.7 Million, Ups Real-Time eCommerce Efforts

Israel-based Yotpo, which provides e-commerce sites a platform for adding a social layer to product reviews, has raised $10.7 million in a first-round funding led by Blumberg Capital. Participating in the round were prior investors including Rhodium, Gandyr Group, Oliver Jung and 2B Angels.
 
Launched in March 2011, Yotpo’s technology is meant to help Web retailers boost sales by powering reviews from verified customers and people who agree to connect their social media profiles to its system. That means reviews can be shared across sites like Facebook, LinkedIn, Twitter and Foursquare to broaden word-of-mouth online.
 
It encourages reviewers to connect their profiles by offering coupons, and the promise of gaining wider influence in a given category. Yotpo also aims to generate more reviews for e-commerce partners by sending customers email messages after purchase asking them to post a review through the email itself to streamline the process.
 
Yotpo also assigns badges to reviewers, such as “verified reviewer,” for someone that has a confirmed email address, or has connected their social profile, and “verified buyer,” someone who has made a purchase from the site. It may also assign scores to reviewers, like a Klout score, based on their perceived credibility or expertise in a particular area.
 
“By maintaining a real-time social graph behind the scenes, we enable each potential buyer to connect their social profile and see his social distance to the reviewer. This increases trust for the buyer and conversion rates for the ecommerce,” said co-founder and CEO Tomer Tagrin.
 
Indeed, the whole idea is to provide more trustworthy reviews, giving shoppers more confidence in making purchases, and ultimately drive more sales. Yelp, for example, has long battled scammers to insure that reviews on the site aren’t fake, with about one in five filtered out as fraudulent.
 
Reviews, of course, can be negative as well as positive. But Yotpo (an acronym for Your Opinion The Public Opinion) lets retail sites choose which reviews to show and which to hide. Hiding legitimate negative reviews, though, won’t help build a site’s credibility.
 
Tagrin says Yotpo has amassed some 600,000 reviewers to date, with more than 10,000 U.S. online businesses using its free platform, including Diamond Candles, Adore.me, and Grand Slam New York. Globally, it claims to serve 30,000 businesses and 50 million consumers. The 22-person company also offers its service through e-commerce software providers, including Shopify, Magento, BigCommerce and PrestaShop.
 
So how does Yotpo make money with a free offering? it’s pursuing a freemium model, where any business can get its social reviews system without charge, but also rolling out a premium product providing higher level services like increased customization, analytics and support. But Tagrin concedes the company’s business model is still a work in progress.
 
With its new financing, the company plans to increase hiring in its Tel Aviv headquarters and its U.S. office in San Francisco to accelerate product development, sales and marketing. In connection with the funding, Warren Adelman, former GoDaddy CEO, will join Yotpo’s advisory board.
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