Hang, an NFT-based loyalty startup, raised $16 million from investors like Paradigm, Mr. Beast, and Kevin Durant. Check out the 10-slide pitch deck the startup used to secure the deal.
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- Hang is a Web3 startup that allows brands to offer NFT-based loyalty programs to customers.
- Cofounder Matt Smolin wants to revamp what he says is an outdated sector with blockchain tech.
- See the 10 slides Hang used to raise $16 million in Series A funding from investors like Paradigm and Tiger Global.
For many consumers, thinking about brand loyalty and membership programs conjures images of airline miles and Starbucks rewards. Even as more big-name companies get in on the rewards game, many brands don’t offer anything at all in the way of loyalty programs.
Matt Smolin is hoping to both reinvent how consumers view loyalty programs and convince brands such programs are worthy investments with the recent launch of Hang, his startup that allows brands to build loyalty and membership programs using NFTs and blockchain technology.
“It’s wild to me how many brands big and small that you definitely know don’t have loyalty programs,” Smolin told Insider. “Everyone thinks of Starbucks and credit cards and airlines and just assumes that every brand has a loyalty program, but many don’t.”
And many brands that do run loyalty programs don’t have great tech infrastructure. “They use pretty archaic software that’s hard to integrate, hard to change, hard to set up, and really, in all these cases, doesn’t fully incentivize users,” he said.
Earlier this month, Hang announced a $16 million Series A round led by Paradigm, which has invested in other big-name Web3 players like FTX and OpenSea. Other investors in the round included Tiger Global, Kevin Durant’s Thirty Five Ventures, Mr. Beast’s Night Ventures, and Good Friends, a venture capital firm started by the founders of direct-to-consumer giants Warby Parker, Allbirds, and Harry’s. Hang also secured participation from big-name angels for the round, with Tiffany & Co. executive vice president Alexandre Arnault and Bombas CEO Dave Heath among the participants.
Other retail-tech companies have recently launched similar projects using NFTs to build customer loyalty.
This summer, Shopify launched a program allowing merchants to give exclusive perks to NFT holders. Try Your Best, founded by Outdoor Voices founder Ty Haney, allows brands to reward customers directly with NFTs, tokens, and direct discounts. And Glow Labs, founded by two JPMorgan alums, offers Web3 brands ways to engage their customers with blockchain-based rewards.
Why NFTs make sense for loyalty programs
Smolin believes Hang’s loyalty programs can increase lifetime customer value and help offset rising customer acquisition costs. Increasing how much customers spend with a brand is easier than trying to lower customer acquisition costs, he said.
But Smolin says that current marketing and loyalty programs don’t do enough to engage customers and build value. He points to the resale potential of NFTs and their interoperability across the digital world as two main benefits of the tech. For example, a customer could resell a top-tier membership status on a secondary marketplace, and brands looking to collaborate could link their loyalty programs seamlessly.
While NFTs may be buzzy tech, Smolin says that the benefits the blockchain offers brands go beyond the hype that limited drops or sky-high prices command. While many brands have offered one-off Web3 projects and projects like Bored Ape Yacht Club have sold for eye-popping sums, Smolin believes building long-term loyalty is more valuable.
“At the end of the day, it’s so much more impactful for a big brand to get all their users to spend 1% more per year or 10% more per year than it is for them to get 10,000 people to spend $400 once,” he said.
Hang plans to use the majority of the Series A funding to expand its team, particularly its product, engineering, and sales teams, and to bring on more brands as clients. It’s already begun working with brands like Budweiser, Pinkberry, and Bleacher Report.
Even if brands aren’t totally sold on Web3, Smolin thinks that Hang’s benefits will get them on board.
“I totally welcome skeptics because what we’re building is such tangible utility for actual brands and consumers,” Smolin said.