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This start-up makes money by giving away free stuff

This start-up has raised $3 million in funding to fuel a website that lures users by giving stuff away for free.

It's called Poshly.com, and the early stage start-up has given away more than $100,000 in freebies like Sephora gift cards, Jimmy Choo perfume and even water-resistant speakers.

But there's a catch. Visitors to the site who want to score something for free must answer a short list of questions like: How old are you? Have you ever been on a cruise vacation? What's your skin tone? And only after answering 10-12 questions do users qualify for a chance to win the freebie.

Founder and CEO Doreen Bloch says Poshly's proprietary technology engages consumers with what she calls quizzes. Brands not only pay for access to the consumer data, but also provide Poshly with the items that are given away.

"Brands always feel like they're behind because trends in the beauty industry move at the speed of light," Bloch said. "As an avid beauty consumer, I saw an opportunity to bring big data and beauty to help solve this problem."

Users can enter as many giveaways as they want, but they should be prepared to answer a lot of questions.

Venture capitalist Nir Liberboim, founder of Uprise Ventures, raised the issue of consumer fatigue: "I imagine it's tough to come back and answer a lot of questions for free," he said. "What keeps them coming back for more?"

Aside from the chance of winning free stuff, Bloch said the technology is fun, fast and mobile-friendly – keeping members coming back time and again. "To date, consumers have answered more than 20 million questions about themselves," she said.

Poshly is the only real-time consumer intelligence platform for the $382 billion beauty industry, according to Bloch. "Our differentiator is that we're a data company at the core. We really focus on our technology platform as a way to distinguish ourselves in the market."

The company has a variety of revenue channels, including ad hoc research campaigns and sampling campaigns, and its largest channel is a SaaS (software as a service) subscription model for access to the data.

Headquartered in New York, Poshly's team also has offices in Los Angeles and San Francisco and has worked with more than 30 clients including L'Oreal, Unilever and Stowaway Cosmetics. It recently partnered with Time Inc., which is now licensing Poshly's proprietary technology. Since launching in 2011, the company raised $3 million in funding. Key investors include Frontier Equities, 645 Ventures, and Astia Angels.

In January, Bloch made Forbes' "30 Under 30" list in the retail & e-commerce category. Her company also was named one of Fast Company's "Top 10 Most Innovative Companies of 2015."

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