Charu Chundury was once an entrepreneur focused on software to help manage local youth sports. But these days, she sees an opportunity to tweak the model for charitable giving with an “effort-free” hyperlocal product aimed at the $6 trillion-a-year consumers spend — all the while benefitting small businesses and consumers. How so? With a new company called FundsOn.
The infant startup hatched with husband and business partner Sastry Chundury (she is president and he is CEO) essentially adds a new twist to the much-debated, sometimes maligned daily deals business: doing good.
FundsOn signs up merchants to offer both deep, short-term discounts and moderate long-term discounts; consumers sign up to purchase the deals and simultaneously choose a non-profit or organization (listed on the site such at their child’s school) as a beneficiary of a percentage of the sale; finally FundsOn grabs its cut. Voila, everyone wins, in theory — the merchant gets customers without breaking the bank; consumers get a deal and feel good about it; and non-profits, charities and schools get a check. And for the record $290B in donations in ’09
FundsOn began in Northern Virginia where it has been operating on $200,000 angel funding since late last year, and the pair are planning expansion of their give-and-take model to the nearby — and lucrative — D.C. market soon. This interview results from my meeting and e-mail exchanges with Charu recently.
How did the company get started? Where did the idea come from?
We ran another company that provided SaaS-based group management software to local youth sports organizations. We were constantly being asked by our customers to help them with fundraising. After doing some due diligence, we discovered that most of the current fundraising methods were quite antiquated, for example asking for donations outside a grocery store, selling wrapping paper or cookie dough.
In addition, many groups would also work with local merchants and ask for some donation in return for their logo to be placed on their websites. We found that there was inherent pain in this market for both the groups and the businesses, so we decided to develop an online platform that will bring them together. That seed idea spun out as what is now FundsOn, which is an effortless and sustainable method of raising money for groups and an excellent marketing platform for local businesses.
Let’s face it, we don’t just live on coupons. When was the last time someone decided not to eat out because he didn’t have a deep discount coupon at his favorite local restaurant?
What is the model? Businesses offer to give 10% or more discount to FundsOn users and then donate 5-10% of the sale to the non-profit of the buyer’s choice?
We have two products…
- Year-round Listing: Business needs to give back a minimum of 5% in order to be listed. Most give 10-15% back for each purchase. Many give 10-15% additional discount.
- Limited-Time Discounted Offers: Businesess offer deep discount and 10-20% give-back for each purchase.
- (More details on these products here.)
Is there a low-end limit? Do users have to get friends to also buy the deal or can I purchase the deal today and go redeem it myself tonight?
There is no low limit for both limited time offers and year round listing. Every purchase and fundraising dollar counts.
Do businesses pay the money direct to the charity or non-profits over and above the stated discount?
We handle all the transactions and disbursements to charities. There is no administrative overhead for businesses and charities.
Why should anyone (parents included) sign up and choose a school or charity (or create a charity page) instead of using the Groupons and LivingSocials of the world where the discounts are enormous?
The discounts offered through our limited-time offers are the same as on Groupon or LivingSocial.
But let’s face it, we don’t just live on coupons. When was the last time someone decided not to eat out because he didn’t have a deep discount coupon at his favorite local restaurant? But if your lunch outing supported your school, you would happily buy online from FundsOn even if little or no discount was offered before heading out to your local favorite and the restaurant is happy receive your repeat business.
About how many businesses have signed up?
We have worked with more than 100 businesses so far. There is a wide variety of businesses ranging from kids summer camp providers, restaurants, spas, entertainment and household services.
How many non-profits are available to receive funds?
Close to a hundred.
Are you planning to raise money?
Yes. Raising more capital for marketing from investors knowledgeable with the cross-section of e-commerce, philanthropy and online business-to-consumer business space.
There are a lot of daily deals sites out there — have you found businesses getting fatigued by all the requests for deals? Do they see your model as more appealing?
The combination of both our products is very appealing to the businesses. Working with FundsOn provides businesses an exceptional branding opportunity as a community-conscious business and a good alternative. Many businesses have a policy to never discount their product and to preserve their brand. Many businesses also prefer to work with us because they believe in giving back. FundsOn model fits well for them.
Groupon and LivingSocial have been raked over the coals by critics for their models, suggesting they ultimately hurt small business. Is that the truth or is reality somewhere in the middle?
I think the reality is in the middle. The model would work well for some types of businesses but might not work for others.
Rick Robinson’s Turf Talk column appears every Wednesday on Street Fight.