Lightbank investing in 'social haggling site' oBaz

August 09, 2011|By Wailin Wong | Tribune staff reporter

Chicago-based technology investment firm Lightbank is investing in oBaz, a local "social haggling" startup that negotiates custom discounts for groups of consumers.

Lightbank was founded by Eric Lefkofsky and Brad Keywell, who were early backers of Groupon and are now funding a growing number of startups both in Chicago and around the country. Brian Ficho, the founder oBaz, first pitched his company to Lefkofsky and Keywell 18 months ago and was invited to become a founder-in-residence at Lightbank. Ficho worked at the firm for a year, developing his own business idea while working with other portfolio companies and helping to scout potential deals.

The size of Lightbank's investment was not disclosed, but the firm's standard seed investment is generally under $1 million.

On oBaz, users looking to buy a particular product can create a group or join an existing group for free. When the group reaches a certain size, usually around 25 people, the company's professional "hagglers" begin contacting merchants and retailers to get the best price possible. Members of the group are not obligated to purchase the deal. Those who do opt in receive a unique promotional code that allows them to buy the deal. For example, oBaz was able to negotiate a deal on a Nikon camera kit worth $900. Members of the group paid $20 to oBaz for a $300 discount on the package. Ficho said other groups have successfully haggled deals on products such as a high-end stroller, sunglasses and GMAT test preparation software.

"It's not really marketing for the business as much as free customer acquisition," Ficho said.

Ficho said oBaz has 10 employees and will use the Lightbank funding to make more hires and expand operations. The site's current version was launched about six weeks ago but is getting a new design and additional features that go live on Tuesday.