Start-up of the Week / Gift Cards on the Go

With the Israeli start-up Celebrator, gift cards are on your smartphone and at your fingertips. And thanks to its relationship with Facebook, everyone will know what a good friend you are.

For a while now, gift cards have been the lazy man's option for birthday and holiday gifts: they save trouble and thought but not always time if you have to visit the store to get them.  

Celebrator, an Israeli start-up, is trying to make the purchase of gift cards much easier by connecting it to the world of mobile devices and Facebook. Celebrator’s application lets you buy a virtual gift card from 12 Israeli stores and then send it to the intended recipient's phone.

When the recipient wants to cash in, he heads to the store where his e-card is scanned with a special barcode scanner that works with mobile screens. In stores that do not have the scanner, the cashier types the code into the computer by hand.Manual entry? How dated.

“The market in Israel is highly developed technologically, but there is still a gap when it comes to using these technologies in the retail world," says Guy Israeli, one of Celebrator’s founders and its CEO."We’re filling this gap and adapting ourselves to the chain stores without anyone having to invest in devices.”

The process of purchasing and giving the gift card is done entirely through an interface with Facebook. Users who log-in to Celebrator using their Facebook accounts can see a calendar of their friends’ birthdays. They can select a friend, choose a participating retail chain and card amount, and instantly earn major best friend points almost without trying.

The purchaser can also recruit other Facebook friends to increase the amount of the gift. When sent, a digital birthday or holiday card can be included with the gift card. Naturally, this will appear on the timelines of both giver and recipientso the other 3,000 of your friends can "like" it.

Celebrator is a welcome development for those living far away from their loved ones. This week, the application became available in the United States, though price is still listed in shekels. So you'll have to download another app to do the currency conversion.

Unlike other applications that enable gift purchases by groups of people – such as The Gifts Project, which eBay acquired last year for about $20 million – the friends who add money to a gift on Celebrator cannot see how much other friends contribute. But if the log-in is done through Facebook, there is no way to hide the identity of the friends who contributed to the gift… or who didn't. Smells like potential drama.

But Celebrator isn't really concerned with your friend politics – it's focusing on the viral nature and advertising aspect of exchanging gifts on social networks, not on getting your group to agree on how much to spend and where.

The process of adding money varies according to the retail chain. Some cards allow the addition of more money until the moment the recipient uses the card, while others allow money to be added for a 48-hour-period.

At this stage, users can log-in only through their Facebook accounts, though they can choose to notify recipients by text message or email. Those who don't own smartphones can purchase gift cards at Celebrator’s website.But seriously, who doesn't own a smartphone?

Israeli recently returned to Israel to start Celebrator after several years in London as an entrepreneur and former partner in a venture-capital fund. His co-founder, Yaron Pasternak, hails from the world of gaming and online marketing. Israeli and Pasternak concentrate on features and marketing while the app's technological development is outsourced. Payment security is provided by ZooZ, an Israeli company, and Praxell, a payment management firm.

Celebrator has already signed agreements with retail chains Castro, S-Wear and the baby-products firm Minene. Its business model is a profit-sharing agreement with retail chains rather than a service charge for customers. As a promotion, Celebrator offers some retail chains an agreement in which the first ten shekels on the gift card are free.

Celebrator, which went live at the beginning of September, is available for iPhone and Android, and has plans to develop the application for Tablets. Recently, Celebrator raised several hundred thousand dollars in seed money from a European investment firm.

Bloomberg