AI Shopping Assistant Karma Raises $25M Series A - Target Global Leads

Karma Secures $25 Million in Series A Funding

Karma, an AI-powered shopping assistant and network, has successfully raised $25 million in Series A funding. This investment round was spearheaded by Target Global, with additional participation from MoreTech Ventures, as well as existing investors NFX and Altair Capital.

Company Overview and History

Founded in 2014 by Jonathan Friedman and Ronen Yuval-Hoch, Karma initially began as a simple bookmarklet designed to assist consumers in tracking and saving on products.

The company, based in Tel Aviv, has since expanded its offerings to include browser extensions and dedicated mobile applications for both iOS and Android platforms.

Currently, Karma employs close to 60 individuals across its offices in Tel Aviv, Minsk (Belarus), and the U.S. It collaborates with over 30,000 retail partners, including prominent brands like Apple, Nordstrom, Farfetch, Target, and Nike.

The Inspiration Behind Karma

Jonathan Friedman, CEO and co-founder of Karma, shared the origin of the idea in an interview with TechCrunch. The concept stemmed from his wife’s question: “Why isn’t this process automated?”

The initial goal was to simply notify users when a desired item went on sale in their specified size and color, automating the price change tracking process.

Core Functionalities of the Platform

Karma now centers around three primary functions designed to enhance the shopping experience:

• Universal Shopping Lists: Users can create and manage shopping lists, saving products for future purchase in a centralized location.
• Real-time Notifications: The platform automatically alerts users to price changes or when items are back in stock.
• Automatic Cashback & Coupons: Karma actively searches for and applies coupons at checkout, and provides access to cashback offers.

Karma vs. Honey

While Karma includes an automatic coupon-finding feature similar to Honey (owned by PayPal), Friedman emphasizes that it’s just one component of a broader service.

Karma differentiates itself by supporting the entire pre-purchase journey, integrating various relevant services into a single platform, and also surfacing available coupons.

PayPal’s focus with Honey is also on engaging shoppers before they complete a purchase, integrating personalized deals directly into its app.

Cashback Integration

Karma’s platform also automatically identifies and applies relevant cashback offers available to users at hundreds of retailers during the checkout process.

Future Plans and Growth

With the new funding, Karma intends to double its team size within the next year.

The company will also prioritize the development of new features and continued investment in AI and machine learning technologies.

Expanding its user base remains a key objective for Karma.

Current User Base and Growth Metrics

Karma currently serves approximately three million customers, with around 650,000 monthly active users.

The user base has experienced consistent growth, increasing by 15% to 20% month-over-month.

To date, Karma users have collectively saved over $144 million this year.

Target Audience

Friedman clarified that Karma’s primary demographic consists of millennials and Gen Z consumers.

He noted that the platform doesn’t primarily attract traditional coupon seekers, but rather a higher-value shopping audience.

The average order value across Karma’s merchant partners exceeds $100, indicating a preference for premium products and a desire for a smarter shopping experience.

Expanding Beyond Pre-Purchase

Looking ahead, Karma plans to extend its services beyond the pre-purchase phase, exploring opportunities in point-of-sale and post-purchase strategies.

Vision for the Future

Karma aims to establish itself as “the biggest shopping network in the world” and become the leading force in automating the entire shopping experience.

The company intends to continually improve the shopping journey for its users through the launch of new services and features, with some planned for release later this year.