Sprout Social grabs funding for online social business tools

Sprout Social, a service for businesses to identify and engage with potential customers through social networks, today announced it has secured a first round of funding. First reported on by TechCrunch, the company has since confirmed the funding, though no specifics to the deal were disclosed. Leading the funding are Groupon founders Eric Lefkofsky and Brad Keywell, through their recently launched investment fund Lightbank. This marks the third investment for Lightbank, including Facebook application Where I’ve Been and Poggled, a social aggregation site.

Sprout Social, currently in private beta, lets businesses monitor, track and communicate with potential customers online using services like Facebook, Twitter, Yelp, LinkedIn and Foursquare. A discovery feature sends businesses contacts deemed potential customers based on keywords they mention in their posts and demographic data. A contact center and promotions tool then allows users to organize and target these potential customers. An analysis tool allows users to track the progress of those promotions.

More than 500 business users are registered for the beta site currently. Sprout Social expects to launch publicly in the next six to eight weeks. While the company wouldn’t disclose specifics, customers include companies of all sizes from national chains to local establishments. Cofounder Justyn Howard told us that the company’s sweet spot is a smaller client who wants the same advantages as larger companies that can afford teams of people dedicated to social media.

The company enters a crowded space on a few levels. First, the name “Sprout” will be hard to brand: Variations of it are currently in use use by several companies, including Sprout Inc., which provides social advertising. Second, tools like RSS feeds, blogs, bookmarks and social networks can be leveraged to find potential customers. Though the process is a bit more manual. Third, numerous companies already exist that are providing similar services and tools, including Scout Labs, which was just purchased by Lithium Technologies.

The Chicago-based company, founded in 2009, plans to use the funding to launch this spring and expand its service.