Massdrop have announced that it has raised $6.5 million in a Series A round of financing, led by Mayfield Fund. This new funding brings the company’s total funds raised to about $8 million, which includes existing investors Kleiner Perkins, First Round Capital and Cowboy Ventures. Massdrop will use the cash to fuel its rapid growth and deliver on its vision for a new wave of community-driven commerce.
If you haven’t come across Massdrop before, it’s a bit like a social version of GroupOn. Massdrop supports a range of communities from automotive to in-vogue vaping. A poll product category is put forward and enthusiasts suggest different models in the product category, before everyone votes on their preferred one. For example, there might be a poll for external battery packs with models from Anker, NewTrent, Mophie and Satechi put forward and then voted on. Once there are some top choices, Massdrop approach the vendor(s) to see if they would be interested in a bulk sale, potentially with a range of price points based on volume. If agreeable, the product is put on sale with the different points shown thermometer-style. Purchasers can either buy regardless of price point or else commit to buy when it reaches a particular point.
It’s a cool idea that seems guaranteed to get savings. There are some downsides, the main one being that you have to wait until you get your hands on the product. First, the purchasing window has to close, then the whole shipment is delivered to Massdrop who finally re-ship the individual items. Definitely not for goods you want in hurry, but where it scores is that you potentially get the best product in the class at a good price.
On this basis, it’s not hard to see why Massdrop could be big. It combines the benefits of a crowd-sourced product recommendation site with the power of group purchasing to reduce prices while keeping quality up. For vendors, it’s no longer a race to the bottom; there’s an incentive to make good products.
Further, unlike Kickstarter and Indiegogo, you’re buying a real, existing product and not gambling on the design and manufacture of an unknown product which takes months to deliver.
I think that the financiers have made a canny investment in Massdrop as there’s lots of potential here and I’ll be looking out for a bargain on the site too. What do you think?