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Posted on Wed, May 22, 2013 : 1:08 p.m.

Ann Arbor tech startup FlockTag raises more than $1 million to grow business

By Ben Freed


FlockTag is operating at businesses like Espresso Royale in Ann Arbor, Novi, Detroit, East Lansing, Champaign, Columbus and Bloomington.

Melanie Maxwell |

As panelists and speakers at the Michigan Growth Capital Symposium in Ypsilanti continued to deliver good news and positive predictions about investment in area startups, one Ann Arbor technology company offered a concrete example for its optimism.

FlockTag, a tech company working to digitize customer rewards for smaller businesses, announced at the conference that it has raised more than $1 million in a Series A round with $250,000 still available for investors who could help the company move forward. CEO David Lin said that the money will keep FlockTag, which previously raised $650,000 in seed funding, operating through the first quarter of 2014.

“The money will help extend our runway as we continue to grow and become profitable,” Lin said.

The new round of funding includes $500,000 from Ann Arbor-based Amherst Fund LLC. Amherst President and CEO Matt Turner said he has been involved with every round of funding the company has raised and plans to continue investing as it moves forward.

“As time has gone along, the company has only gotten more and more exciting,” Turner said.

“At each stage it’s become more and more real, and it’s evident that this is something that could be really big.”

Turner described the Amherst fund as a “family fund,” halfway between an angel investor and established venture capital fund. He said he hopes to attract another VC fund to finish out the current round and build momentum for the company’s next fundraising effort.

“We’re looking for someone to come in and invest now who can then turn around and be a leader or help with the networking to find a leader for the larger Series B round that will hopefully close next year,” he said.


Co-founder and CEO David Lin presented FlockTag's progress and potential at the Michigan Growth Capital Symposium Wednesday.

Ben Freed |

The dual premise behind the company is that small and medium-sized businesses need help delivering rewards and targeted deals to their customers, and at the same time consumers want those rewards and deals delivered in an easy and convenient manner.

FlockTag began as a replacement for the “buy x amount, get one free” cards that many shoppers and diners carry around in large stacks. FlockTag cards use near field technology to “check in” at stores and restaurants by tapping the card on a sensor attached to an Android tablet.

The loyalty platform is a compelling hook, but is really more of a means to an end for the company. The main goal is to collect consumer data that can be turned around and used for hyper-targeted advertising.

“The story we tell to shops is that people are ignoring you and going to shop at a business right near by,” Lin said.

“We can help you with that by identifying those same people and offering them incentives to try out your store.”

Approximately 100 companies in seven cities across the Midwest use the FlockTag system. There are more than 100,000 customers who have used their FlockTags more than 1 million times.

The company’s revenue model is a combination of subscription fees by stores that use the product profit sharing from successful marketing campaigns. FlockTag also takes a cut of “Groupon” type deals that are offered to targeted users who have been identified as potential customers by the system.

In his presentation at the MGCS, Lin estimated that within 5 years his company could be generating $33 million in annual revenue.

The fundraising success by FlockTag makes it the fourth Ann Arbor-area company to raise $900,000 or more in the past month, joining Seelio, IROA Technologies and Esperion.

Ben Freed covers business for You can sign up here to receive Business Review updates every week. Reach out to Ben at 734-623-2528 or email him at Follow him on twitter @BFreedinA2



Thu, May 23, 2013 : 10:50 a.m.

While I wish these young entrepreneurs well, the hype for this business in continues. Earlier stories had unsubstantiated numbers. The numbers change every story. This time no discussion of the company's revenue or the "incremental" business it generates for businesses though. Incremental business for a company participating would be the key selling point.


Wed, May 29, 2013 : 11:36 a.m.

Ben: What I mean by unsubstantiated numbers is exactly what you said, "we take the company at their word". So they could be at $232,000 in revenue today, and you take the "$33 million in 5 years" and print it, giving it some credibility that others will then use when they do research and all of a sudden it's "true". Clearly numbers change as a company evolves. But if you read earlier stories, you see huge numbers given out as "incremental business" for companies using the service, which then were restated. At the end of the day, the only reason a business uses any loyalty program is to keep their customers and generate incremental business. The prior story said "Nearly 100,000 users throughout 100 locations generating an estimated $100,000 in additional revenue". That's $1 in additional revenue per user. Can't possibly justify the system to a company. And as a business, if the data collected generates traffic to your competitor, and you're both in the program, then you'd have a problem with that since the fact that the customer came to your restaurant helped generate that referral ad. Clearly the success, or failure, of this business will hinge on whether retailers see true incremental profits, or customer retention, that justify the cost. Haven't see one retailer say that. My point on "hype" is that there have been many stories about this company. I had read something about "we do a prelaunch, a launch, and a post launch story" or similar.

Ben Freed

Thu, May 23, 2013 : 1:42 p.m.

A2comments, The numbers change every story because startup companies are constantly changing, evolving, pivoting and growing or shrinking. If the numbers stayed the same that would mean we aren't doing our jobs right. Also, there is discussion of revenue towards the end of the article. I'm not sure what you are referring to as "unsubstantiated" numbers, but numbers given by private companies in their early stages are often difficult to verify as they do to not have public filings. We take the company at their word that the profits and/or losses they report to us and their potential investors are accurate.

Ben Freed

Wed, May 22, 2013 : 5:54 p.m.

Kai, It is competition to Groupon. You can read more about the business model here: Essentially, their hypothesis is that Groupon cannibalizes profits rather than creates new customers, something they can do with their platform.

Kai Petainen

Wed, May 22, 2013 : 7:42 p.m.

Fascinating! I wish them the best... competition is good. And they might have a valid point about Groupon... I'll also presume they're not as sloppy as Groupon was with their accounting.

Nicholas Urfe

Wed, May 22, 2013 : 5:52 p.m.

"The main goal is to collect consumer data that can be turned around and used for hyper-targeted advertising." The really great thing about a traditional loyalty ard is that it doesn't collect personal data and can't "be turned around and used for hyper-targeted advertising."


Wed, May 22, 2013 : 7:43 p.m.

Flocktag is awesome. As a J-O-O I am always trying to get free stuff, and I have a wallet full of punch/rewards cards (Qdoba, Best Buy, Ashley's, McCafe). When businesses use FlockTag, I don't need to rummage through all my cards, I can just put my wallet up to the sensor. It pretty much functions exactly like a traditional loyalty card except every once in a while the cashier tells me "Oh by the way you also have a coupon for half off of a _____ on your FlockTag"

Ben Freed

Wed, May 22, 2013 : 5:56 p.m.

Nicholas, Personally, I'm OK with hyper-targeted advertising. Ideally, it means that I will be offered deals and discounts that are more relevant to me and can help me save money doing things I already like and in areas that I already frequent.

Kai Petainen

Wed, May 22, 2013 : 5:26 p.m.

cool stuff! "FlockTag also takes a cut of "Groupon" type deals that are offered to targeted users who have been identified as potential customers by the system. " So... it's competition to Groupon?