This is the fifth in a series of profiles of Y Combinator Winter 2011 (YC W11) startups.
“Keep the change.” You might say that to a taxi driver who’d delivered you speedily and safely to your destination, but it’s unlikely you’d ever say it to a grocery checkout clerk or a Nieman Marcus salesperson. Yet over time the change on your daily purchases can add up to amounts that would make a significant difference to some group, such as your favorite charity.
In fact, if you use your credit or debit card a few times a day, round up each purchase to the next dollar, and add up the difference, you’ll find that you’re racking up $20 in “change” each month, or $240 per year. At least, that’s the average that SwipeGood, a Y Combinator-backed startup based in Palo Alto, is seeing among its users so far. Its mission is to help people give that money to causes they believe in, and, in the process, to help stabilize the fundraising process for non-profit organizations.
Call it “smallesse” (as opposed to largesse). Signing up with SwipeGood, which tracks your purchases and adds the appropriate roundup amount at the end of each month, is a no-hassle, easy-to-understand way to be a mini-philanthropist. At the startup’s website you can choose to send your change to any of more than 500 non-profit groups, from Kiva.org to KQED. Once you’ve chosen one, your money flows to the recipient automatically, providing it with reliable, subscription-style revenue of the type that’s all too rare in the non-profit world.
SwipeGood keeps 5 percent of the donations to fund its own operations. That’s a lot less than the 10 to 20 percent of the annual budget that goes toward marketing and fundraising at most non-profits, says Steli Efti, one of SwipeGood’s three co-founders. “We thought this would be a way to make fundraising more affordable, and to turn it into month-over-month recurring revenue,” Efti says. “Our whole reason for existence is to provide the simple and most elegant solution for giving.”
Efti and his co-founders Anthony Nemitz and Thomas Steinacher made up one of the 43 startup teams to finish the Winter 2011 term at Y Combinator this spring. Even before the incubator’s Demo Day on March 23, the company had raised $500,000 in seed funding from individual investors such as Bebo co-founder Michael Birch. “We were already making revenue then, so we are looking at a very long runway,” says Efti. “I think we could become profitable in a very short period of time.”
An ethnic Greek who was born and raised in Germany, Efti came to the U.S. three years ago with big dreams. His first startup, Supercool School, built a white-label online education platform that’s now used at 4,000 schools in 43 countries. He thinks SwipeGood, which is already seeing weekly growth in the double-digit percentages, can sign up 10 million U.S. households over the next five years—enough to generate donations of $2 billion per year. That would put it on a par with the Salvation Army, the nation’s second largest charity, which raised $1.7 billion in private support in 2010.
The very same consumers who would balk at donating a set percentage of each purchase to a charity are perfectly happy to give away their change, Efti says. “People are afraid of
