The NFT market was worth $41 billion at the end of last year -- nearly as large as the conventional art market by some estimates -- and it's expected to nearly double in size by the end of 2022, according to a report released this week by blockchain analytics firm Nansen. As the space becomes increasingly crowded, individual NFT projects must find ways to stand out in order to succeed.
The crypto community is tightknit, so incentivizing repeat purchases from customers is often a key driver behind success.
"Right now, there are just too many NFT projects and not enough utility [to NFT holders]," Brandon Bryant, a partner at venture firm Harlem Capital, told TechCrunch.
That's part of why Bryant led Harlem Capital's investment into Glow Labs, a white-label software that allows companies and creators to build their own loyalty rewards programs on the blockchain, he said.
Glow Labs, which launched in November 2021, is the brainchild of co-founders Annie Reardon and Renee Russo, two engineers in their twenties who first met at JPMorgan, where they worked together on the developer team for the Chase site and mobile app. Reardon and Russo now serve as co-CEOs of Glow Labs, Russo told TechCrunch.
Russo, who had been investing in crypto as a hobby since 2016, said she started her own NFT project in 2021 while she was still working at JPMorgan. She wanted to reward her customers with an airdrop of a free NFT that they would receive for their loyalty that she hoped would encourage them to continue engaging with her project.
Despite Russo's technical background, deploying the airdrop was so complex that it took her and her team nearly four weeks and cost $10,000 to build, she said. Through that experience, she realized it was prohibitively difficult from a technical perspective to build community through loyalty programs in web3 and teamed up with Reardon to build an easy-to-use solution for project creators.
Glow Labs' product allows creators to deploy a smart contract with no coding required in a matter of seconds, allowing them to create customized loyalty offerings without as much hassle, Russo said. The company offers four main rewards features today, it says.
One reward Glow Labs helps its customers launch is gas back. Projects can offer to cover the gas fee required to mint an NFT on behalf of their customers for future purchases with the goal of encouraging repeat transactions.
The platform also supports projects in rewarding both early adopters and loyal holders, Russo said.
It also allows creators to reward their communities for engagement with the project on social media, drumming up hype around spreading the word on Twitter or Discord. On the back end, Glow Labs collects analytics on social media engagement and shows its customers a detailed dashboard of this information. Its analytics tool automatically detects social engagement for a particular project and can distribute rewards to users in real time, the company says.
While the startup is mainly targeting web3 native companies and projects today, it eventually hopes to attract traditional businesses as well that want to attract customers through blockchain-based rewards, Russo said.
First, though, the company wants to "rinse, repeat and get as much data as [it] can to find [customer] stickiness," Reardon told TechCrunch.
"I'd say 75% of our conversations today are with NFT projects or DAOs, and 10% to 15% of our conversations are with brands that have already done an airdrop, so we're not convincing them on the [value of the] blockchain," Reardon added.
Glow Labs is certainly not the only startup trying to build a product that leverages the power of web3 to build community and brand engagement. Ty Haney, founder of athletic wear company Outdoor Voices, made waves last month when she announced her latest venture, Try Your Best, which aims to help brands reward their customers with blockchain-based assets.
But Glow Labs differs from Try Your Best and other, similar platforms because of its B2B focus, according to Russo.
"We provide software and tools and we let the users create their tokens, have their own branding and empower them to have their own rewards program, whereas other competitors are kind of using their own branding or their own token, or they're only rewarded on one platform," Russo said.
The company has received a lot of inbound interest, but right now, it's chosen to be selective about which customers it brings on board, Russo said. Glow Labs is currently focused on working primarily with brands that have already done two to three airdrops, Reardon added.
"I think that's been a challenge. There's so much demand from the web2 side, but we really need [those companies] to find their way, find their path, and then we can circle back and do the rewards," Reardon said.
Glow Labs announced today that it has raised $4.15 million in seed funding led by Harlem Capital with participation from Forerunner Ventures' Kirsten Green, Female Founders Fund, Red Beard Ventures and Human Ventures.
The company's long-term goal is to work with a broader set of companies outside of just seasoned NFT projects, Russo said. Its investors' areas of expertise tend to coalesce around consumer products, particularly those tailored to women, she added, so a lot of the inbound interest Glow Labs has seen has come from companies in the fashion space.
"We definitely can see Glow Labs being that bridge from web2 to web3, and providing those tools. There's going to be the Squarespace of web 3, there's going to be the Stripe of web3, and, and there's going to be a loyalty rewards software for web3," Russo said. "We want to be that plugin for any project or any company that comes into the space."
This article has been updated to reflect that Harlem Capital led the round, not Forerunner Ventures.