• by Laurie Sullivan  @lauriesullivan, January 18, 2012

Social gifting service Wrapp, which lets consumers give retail gift cards for free through a mobile app, has secured $5 million in funding from Greylock Partners. The venture capital firm co-leads the Series A round with Atomico, an international venture capital firm formed by Niklas Zennström, Skype co-founder.

In November, the Stockholm-based company received $5.5 million from Atomico, and Creandum, a Nordic venture capital firm, which also provided original seed funding in early 2011.

Reid Hoffman, a Greylock partner and LinkedIn co-founder, joins Zennström, Atomico’s CEO and founding partner, and Johan Brenner, Creandum partner, on Wrapp's board of directors. 

Wrapp will use the funding to build out its social gifting service launched in November and move into the U.S. market, followed by Europe. The Swedish company, founded in 2011 by Hjalmar Winbladh and a team of entrepreneurs, already support customers, including sporting goods retailers Stadium, consumer electronics company Elgiganten, Amazon's LOVEFiLM, designer underwear brand Bjorn Borg, among others.  

The founding members are not strangers to technology. They include Andreas Ehn, Spotify's founding chief technology officer; Carl Fritjofsson, digital media entrepreneur and former advisor to Groupon.se; Aage Reerslev, founder of mobile browser Squace; and Fabian Mansson, former CEO of H&M and Eddie Bauer.  

Winbladh co-founded Sendit, the first mobile Internet company, and served as CEO. He took the company public in 1997, before being acquired by Microsoft.  

As for Wrapp, the technology lets consumers download the app on a smartphone running the Android or Apple operating system. The app connects Facebook, allowing the user to gift a virtual free gift card loaded with real money to friends for free. Merchants set the initial free card limit, between $3 and $40, and friends can add money to the card through electronic transactions once the card posts on the Facebook page.

"About 50% of the cards posted to the Facebook wall either receive a Like, a comment or additional funds added to the card," said Winbladh. "About 2% of Facebook users in Sweden download the app, and 250,000 gifts were given using Wrapp in December."

Winbladh estimates about 4.8 million Facebook users in Sweden. The app, only on Facebook today, will soon become available on LinkedIn and Google+.

The National Retail Federation expected 80% of people to buy gift cards during the 2011 holiday season, and shoppers would spend an average of $43.23 per card, up from $41.48 in 2010. The NRF estimated holiday spending on gift cards would reach $27.8 billion last year.