FreeMonee challenges retailers to stop investing in coupons and start giving that money away to its most coveted customers. Give FreeMonee the cash, it says it’ll deliver the customer.

Today the San Mateo-based startup announced a $34 million Series B investment, adding to an $11 million Series A in 2010, which it will use to expand its cash incentive model for retail direct marketing. The Series B was led by Charles E. Ryan, current Chairman of Russian’s UFG Asset Management and Board Member of Yandex, Russia’s answer to Google.

“People call us ‘Google for brick and mortar,’” says FreeMonee co-founder Gadi Maier. “To give out real money, you have to predict spend, and that’s the work that went into the company.”

The Google comparison makes sense considering the data behind FreeMonee’s approach. U.S. Bank, Capital One, and two other undisclosed banks have partnered with FreeMonee, providing transaction data on its 280 million cards. FreeMonee’s predictive analysis, accomplished by artificial intelligence that took two years to train, uses the data to match a gift card to the customer most likely to redeem it. Retailers pay every time a customer redeems one of its gift cards, which FreeMonee splits with the bank facilitating the deal.

FreeMonee says the data provided by banks is never identified with a name, only a numerical code. Banks deal directly with card holders, emailing or texting the offer, for example $10 to spend at Williams-Sonoma and it’s good for a week.

“When a consumer receives a gift, they don’t view it as a discount,” says CMO Jim Taschetta, a former CMO for makeup brand Bare Escentuals and senior vice president at Visa. “Retailers love that it’s not cheapened, giving the effect of deep discounting without deep discount.”

Brands could be shy about being associated with this use of customer shopping data. FreeMonee declined to comment on which retailers are currently participating, only saying hundreds have been a part of its pilot program and view it as their “secret” to driving holiday sales. Reported response rates range widely, from 10–50 times that of traditional promotions or coupons. Previously publicized companies in the program include 1-800-Flowers.com, MyPublisher and Buca di Beppo.

Sweden’s Wrapp recently launched stateside with a similar, hypertargeted gift model. Facebook friends can gift one another cards from participating retailers, which include Gap, H&M and Sephora, who use profile data to target recipients. Cards can be redeemed online or from a smartphone bar code, and retailers pay a fee for each completed transaction.