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May 9, 2023

Why QED invested in Wildfire

Since the beginning of the web, many big struggles between technology giants have fundamentally been about becoming the “starting point.”

In the mid-90s, Netscape’s Navigator and Microsoft’s Internet Explorer battled to be the place where users started to browse (since joined by Google Chrome, Apple Safari and others). Similarly, Google, Yahoo! and Microsoft fought to be the dominant search engine. Being the default, or the starting point, is a powerful thing and has created massive enterprise value in both web browsing and search. Recently, the battleground has moved to being the starting point for commerce. The company who controls the start of the buyer journey can influence what people buy, where they buy from and how they pay. Each of these positions, in turn, results in a different and uniquely powerful revenue stream.

A variety of services (search, messaging financial) play a role as a “starting point for commerce,” but are failing to monetize the shopping they enable. At the same time, merchants are always looking for ways of reaching and converting customers and influencing customers to buy more. While affiliate marketing - in which publishers earn a commission by promoting a product or service made by a merchant using an affiliate link - has been in use since the 1990s, it has become more ubiquitous in an online world.

With the pressures caused by inflation in recent times, consumers’ desire to save money has never been higher. What started out as edge-case “penny pincher” behavior has moved into the mainstream. Companies like PayPal’s Honey and Capital One Shopping sparked consumer interest in online cashback and coupon tools (digital coupons surpassed printed coupons for the first time ever in 2020), and today’s economic conditions have poured gas on the fire.

Fintech Thought Leaders Podcast: One on on with Wildfire CEO Jordan Glazier

Enter Wildfire. Wildfire’s white-label, enterprise rewards platform allows any business to deliver their users cashback rewards and digital coupons at tens of thousands of online merchants, while monetizing the commerce transactions they enable. Using the infrastructure and the performance-based pricing model of affiliate marketing, Wildfire’s technology (including branded browser extensions) displays available offerings to users in-the-moment as they shop online as they normally would.

When a user activates an offer and completes their purchase, Wildfire’s platform tracks and attributes that transaction to them and pays out a reward from the merchant’s affiliate marketing budget, which can be split between the partner and end user. The user wins by saving money, the Wildfire partner earns a new revenue stream and the merchant wins by capturing the transaction.

When we met Jordan Glazer, the founder and CEO of Wildfire, we were intrigued by the technology that he had built. At the time, he was just starting to see traction and was focused on partners in messaging and discovery spaces. While these opportunities are compelling, what got us super interested was the potential we and Jordan see Wildfire unlocking in financial services. Macro trends in financial services have made Wildfire’s proposition increasingly valuable.

Financial institutions are looking to expand beyond providing “back office” function for customers (check balance, transfer funds etc.). They want to embed themselves as a part of people’s daily lives and partner with customers to help them with financial wellness, education, planning and money-saving tips and tools. Cashback rewards for shopping help banks and issuers build retention and loyalty. A branded tool which delivers savings opportunities as a customer shops online as they normally would, is an incredibly powerful tool to increase the number of daily positive interactions with the brand, and helps position the bank/issuer as a helpful partner that facilitates saving money.

Banks and issuers want to shift consumer tender preference, and become top of wallet for more transactions. There has been a hyper-fragmentation of the industry which has created overchoice at checkout in terms of how consumers pay - BNPL, PayPal, card etc. - and banks/issuers have been losing ground and are missing out on interchange fees. Furthermore, conceptually, banks/issuers would like to move up the commerce customer journey and tap into a non-interchange revenue pool in merchant marketing.

Cashback rewards for shopping (derived from merchant marketing budgets) stack on top of any existing cashback programs from a card (derived from interchange). This additional reward can drive tender preference for the consumer, providing tangible extra savings benefits to users. Merchant-funded rewards help banks/issuers by providing a new, incremental revenue stream.

And, it was easy for us to diligence interest from financial institutions given QED’s very strong relationships within the financial services sector. Before and since investing, our conversation with banks, networks, and fintechs have confirmed that Wildfire’s platform resonates. Very rarely do we get such a high “hit rate” on request for introductions and very rarely do we see large financial institutions move as quickly as they have to roll out a partnership. It helps that Wildfire’s platform is fully bank-grade, enabling financial institutions and companies in other highly regulated industries to partner with confidence.

We have also been incredibly impressed by the Wildfire team. The company takes pride in having a roster of high performers who are efficient and know how to work well together. Leading the team is Jordan, a tech veteran and a serial entrepreneur. He began his e-commerce career at eBay where he built and managed three of the company’s largest business units, including computers, consumer electronics and video games.

Later in his career he was CEO of Eventful, an online calendar and events discovery service acquired by CBS Local Digital Media in 2014. Joining Jordan is chief revenue officer Shawn Conahan - who oversees the creation of strategic partnerships with major telco, banking, and fintech companies; chief marketing officer Tristan Barnum - who leads the marketing and partner success teams; CTO Danny Markham; head of product Ian Miller; and VP of merchant development Michelle Wood. The team is a tight knit group of leaders and ex-founders who have collaborated across multiple companies over the years.

We are very happy to have co-led Wildfire’s Series A with our friends at TTV and with participation from existing investors Mucker and Bonfire. Since our investment in mid-2021, Wildfire has exceeded expectations, posting 2,763% revenue growth over the last two years and signing a number of large partnerships which will be announced later this year. In 2022, Wildfire platform drove more than $260 million in online purchases, and end-user shoppers using the platform through Wildfire partners initiated more than 32 million online shopping journeys. And, they have been a lot of fun to work with, so we are thrilled to continue to partner with them as they attack this billion-dollar opportunity.