Early users in an extended pilot program took their participation seriously. David Nelsen, the company’s founder and CEO, said that 95% were holding their stock after a year, indicating they wanted to use it to save. Bumped touts this as bringing Wall Street to Main Street.
The company raised a $30 million Series A led by Canaan Partners, with Commerce Ventures, the Oregon Venture Fund, and the first-ever investment from Valor Siren Ventures, a joint venture created by Starbucks and Valor to identify leading innovation in food and retail technology. Other notable investors include previous and current chairmen of Nasdaq and the New York Stock Exchange and former CEOs of preeminent financial and retail companies such as Goldman Sachs and Neiman Marcus.
In addition to introducing newcomers to investing in stock, it’s also a way to change consumer behavior. Bumped said that the pilot showed users have an average 43 percent increase in monthly spending on the connected cards, and a 1.5x increase in monthly visits to brands that rewarded them in stock when they purchased. The company noted that bringing in new customers is 5-25x more expensive than retaining existing customers, and on average, repeat customers spend 67% more than new customers.
A survey of users showed that 89% of Bumped users think ownership is more exciting than traditional rewards like points or cash back, and 65% of Bumped users have told their friends about a company because of a stock reward.
Amy Dunn, a spokesperson for Bumped, said it will do more experimentation during the holiday shopping season.
“We’ll be sending out weekly summaries – brands that are offering more back for holidays or brands that are relevant to the season, such as Le Creuset cookware, as people prepare to cook for the holidays at home. The summaries will help folks track and understand their options.”
Bumped rewards are invested in a broad-based Exchange Traded Fund (ETF), augmented by fractional stock in up to four favorite companies. Each purchase from a chosen brand pays rewards evenly distributed across the ETF and chosen stocks.
Nelsen describes Bumped as a tech company, and it has built out a powerful and complex platform, in addition to jumping through the regulatory hoops required to launch a brokerage. It has to track user purchases, deposit fractional shares in their accounts and it also has to calculate and deposit dividends on those fractional shares. It does not allow users to buy more shares through Bumped — for that they can go to an online brokerage firm.
Bumped’s data give it a way to experiment with incentives. For some Red Robin customers, Bumped placed $10 worth of stock in their account — no minimums, no requirements — and then it tracked them against customers who received no grant. The differences were stark. Grant recipients spent twice as much and patronized the chain twice as often as those who didn’t get the grant. The company’s data scientist is working on a few other studies.
Bumped is in discussions with firms, including banks, about using its platform to provide stock in loyalty programs.
“Certainly building large scalable systems is a key to this,” said Nelsen. “We scale across a lot of users and a lot of transactions.” The company uses Google Cloud.
“Everyone deserves to be an owner — that’s the mantra that we follow,” Nelsen added. “Everybody should be able to invest, and in America we need a lower barrier of entry to get people into the stock market and I do believe that the brands that step out and decide to do this for their consumer will be remembered for it.”
Bumped has created a path to investing that can be part of people’s daily lives. Just through buying groceries, paying for gas, buying their clothes, eating their dinner out, they can be participating in investing, Nelsen said.
“Investing without requiring incremental spend is critical to helping people navigate the present and save for the future,” Nelsen said. “Bumped creates a simple but powerful entry point to the stock market, giving users the opportunity to not only make the most of their money now, but to prepare for the future as well.”
The company has established its own brokerage, Brokerage services are provided by Bumped Financial LLC, member FINRA /SIPC which does not charge fees.