Read the Sacramento Business Journal Article here.
A Folsom investment firm has invested more than a half million dollars in a Chico-based startup that rewards college students for keeping their phones locked during class.
Moneta Ventures has invested $600,000 in Chico-based Pocket Points as part of a $1 million funding round for the company. The Folsom firm is the startup's largest investor at this point.
The founders are Rob Richardson and Mitch Gardner, two college students from California State University Chico. Richardson, 22, is the CEO and Gardner, 23, oversees operations and sales.
They launched Pocket Points in the fall of 2014 and received their first early-stage investments last year. Besides Moneta, other financial backers in the current round include Northern California Investment Fund LLC and some angel investors. The company currently has 15 employees and plans to add five more.
“Their story is phenomenal. These are college students taking a leave of absence from Chico State to do this,” said Lokesh Sikaria, managing partner of Moneta.
Pocket Points uses "geo-fence" technology to know whether students — or specifically their phones — are inside certain campus buildings. Users sign in to the app and earn points for not using their phone in class. The points help users earn discounts at local eateries, like pizzerias and pubs, and for services such as spray tanning.
Richardson developed the idea for the company while sitting in the back of a large lecture hall and watching many students on their phones during class.
Sikaria was introduced to the team in September. He couldn’t invest at that time because a parameter of Moneta’s fund requires a minimum of $500,000 in annual revenue to be eligible.
“I told them they need to show revenue. They came back in six months and they had surpassed the revenue threshold,” Sikaria said. “At that point, it was a no-brainer to invest in them.”
The two founders are now on their third leave of absence from the university as they work full time on growing the company, Gardner said. Many of their employees are Chico State graduates. Gardner was studying business marketing and Richardson was studying computer science when they started the company.
As part of the deal, Moneta wants the company's founders to move the startup to Sacramento where it would become part of the city's growing tech scene — something that remains to be resolved. The company's founders said they're open to having some kind of presence in Sacramento, possibly in a co-working space, but aren't sure they want to move their headquarters, said Gardner. "We're looking into it," he added.
The company's app is currently being used in 65 cities and 120 colleges and universities. The team started with Chico, but quickly targeted the largest college towns in the country, which often have multiple universities, colleges and community colleges. The app has been downloaded 500,000 times, and it has 200,000 active users, Gardner said. It is being used at California State University Sacramento and University of California Davis.
The co-founders are members of the Sigma Chi fraternity, and they used Sigma Chi members at other colleges as paid contractors last summer to go out and sign up businesses to use the site. Their fraternity brothers also spread the word about the app on other campuses.
In the future, Gardner said the company will expand the app to include discounts for movie theaters, high schools, churches and other locations.