High-Impact Entrepreneurship

Wallet overstuffed with receipts? Can’t find your insurance card at the doctor? Endeavor Entrepreneur digitizes your wallet

This article was reprinted from the Venture Capital Dispatch Blog on the Wall Street Journal. See original article here.

By Lora Kolodny

Lemon Aims to Squeeze More Juice from E-Wallets

Putting a new “twist” on digital wallet technology, Lemon Inc. has raised $8 million in a Series A round led by Maveron.

Joining in the financing were Lightspeed Venture Partners, CampVentures, Draper Fisher Jurvetson and the Social+Capital Partnership, a fund launched by former Facebook Vice President Chamath Palihapitiya.

The Palo Alto, Calif.-based start-up makes a “Smarter Wallet” app that its founder wants to see on every smartphone’s home screen. The company is the latest venture from serial entrepreneur Wences Casares [an Endeavor Entrepreneur and Endeavor Global board member], whose previous financial services and tech ventures include Bling Nation, MECK and Banco Limon.

Most companies offering mobile “e-wallet” technology today, including Google Inc., Visa Inc., PayPal Inc., Square Inc. and Venmo Inc., focus on payments via mobile phones, especially at point of sales. Others like Belly Inc., Stampt Inc. or Punchd (now owned by Google) digitize loyalty programs, so people don’t have to carry a paper punch card to get something like a “buy ten, get one free” deal from a favorite shop.

Lemon focuses on all the other sensitive stuff in your wallet, too.

The Lemon app lets users snap images of debit, credit, loyalty, health insurance and ID cards, as well as receipts, tickets and coupons, then upload these to a secure account in the cloud. The accounts store information associated with each card or slip of paper so that they are accessible from any web-connected device. It can even associate “in case of theft” phone numbers with different card types, a handy bit of info for a traveler in a panicked state of mind.

Mr. Casares reports that 1.5 million people already use the free, iOS version of the Lemon app, which launched in the last quarter of 2011. Alongside dialer, messenger and map apps, he believes a secure digital wallet could become essential to the world’s billions of smartphone users.

“I remember playing around with computers before there was a graphical interface,” he said. “Everyone said it was coming. You could not imagine what that world would look like. That’s where we are with mobile. The digital wallet will be as ubiquitous as the spreadsheet became in an earlier time. We want to establish early leadership.”

A diligent, savvy tech consumer with a Dropbox, Google Drive or similar data storage app could of course snap pictures and store images of their wallet’s seam-splitting contents, Mr. Casares admits. But Lemon is an easier user experience for that kind of thing, also providing organizational features like letting users view balances, manage expenditures, and receive deal offers from top retailers via their Smart Wallets.

Lemon just launched a more feature-rich version of its app, Lemon Pro, for $9.99 per month. Lemon Pro users will eventually be able to automatically notify credit and governement agencies, and various service providers to be on fraud alert, and suspend services should they lose their phones or wallets. He also said they may be able to purchase something like wallet insurance via Lemon Pro.

A partner with Maveron in San Francisco, Amy Errett, said Lemon’s focus, near-term, is “to create a secure foundation for a digital wallet” and solve a consumer pain point that is here today for consumers, not just sellers. She believes Lemon’s addressable market is “tremendous, encompassing anyone who currently uses both a wallet and a smartphone, globally on any platform.”

Competitors to Lemon, including Visa, Mastercard, Google and Isis (a joint venture between mobile carriers Verizon, AT&T and T-mobile), are thinking more about the payments piece, she said.

It appears that Apple is getting into the fray now as well. At the Worldwide Developers Conference on Monday, the smartphone giant revealed Passbook, an app that should ship with all iOS 6 devices. Passbook scans QR codes to get information about tickets for travel and events, then keeps it updated in real time, notifying users, for example, if their train is delayed or a concert is rained out.

Ms. Errett sees Apple’s move as a positive for Lemon. “The Passbook news from Apple validates the ticketing and couponing ‘compartments’ of Lemon’s Smarter Wallet,” she said. “In addition, it should dramatically speed up adoption of QR codes by brands and merchants wanting to reach consumers via their phones.”

Lemon launched on iOS but has Android and Windows phone apps on the way.

With 21 full-time employees today, Lemon plans to use its $8 million in venture funds to grow its marketing and engineering team, and create and test new features and services for its e-wallet apps.

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