Boomerang Sends Facebook Friends Local Gifts

Zach Smith is bringing a new business model along the trail blazed by Groupon — with the same venture capital backers. And it just might help you with some last-minute Christmas shopping.

Smith is co-founder and CEO of Boomerang, a startup that uses Facebook as a venue for gift giving. Like Groupon, Boomerang also brings e-commerce opportunities to local businesses.

Boomerang crunches your friend's Facebook and geographical data to come up with gift suggestions in his or her town for any "giftable moment" it can dig up from your online information — birthday, anniversary, or new job, for example. Then you can buy your friend a gift certificate for that local business at

"We've actually surveyed consumers, and 70 percent of them tell us they'd actually prefer to give a gift for a local business," Smith told CNBC's " Squawk on the Street " last week.

For now, local business engagement is only in New York City, Austin, Indianapolis and Boomerang's hometown of Chicago. Outside of these, gift givers are limited to nationwide online retailers. Boomerang has partnered with corporations including Nike, Banana Republic, Travelocity, Starbucks and Fandango.

Boomerang, an online gift-giving service.
Boomerang, an online gift-giving service.

Smith says one key to the business is that deep discounts aren't necessary to drive gift purchases in the way they are for daily deal sites such as Groupon. And that means better margins for partners.

Boomerang is funded by the venture capitalist firm Lightbank, which has backed Groupon and dozens of other Web-based businesses.

Groupon is seen as a cautionary tale by some. The fallen Internet darling's stock is down 75 percent from its $20 IPO price in November 2011, and has spent much of the last few months lingering below $5 per share. On Friday it closed at $4.93.

Smith says it's far too early for Boomerang to consider going public.

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