With a massive funding round and the support of one of its industry’s biggest players, Raise is gearing up for its next stage of growth.
On Tuesday, the mobile payments startup announced the close of a $60 million Series C round led by Accel. PayPal joins existing investors New Enterprise Associates and Bessemer Venture Partners in the round, which brings Raise’s funding total to more than $147 million.
“It’s incredible to have a partner like PayPal at the table,” said founder and CEO George Bousis. “They’re incredibly innovative, they understand the industry really well and they were very keen on investing more to double down in the prepaid space.”
Raise will use the funding to accelerate development of its mobile platform, used by consumers to buy and manage gift cards that can be applied toward in-store or online purchases.
Launched in 2013 as a digital consumer marketplace for unused gift cards and store credit, Raise has since expanded its offerings to include discounted prepaid cards offered directly by retailers. To date, the company has partnered with more than 350 brands.
“Prepaid is the single largest opportunity in payments globally,” said Bousis. “Just a few years ago, the prepaid Starbucks card was non-existent. Today, it represents nearly 50 percent of all of their transactions.”
Retailers like prepaid options, said Bousis, because they reduce transactions costs, increase customer loyalty and provide them with more data on their customers. Raise also provides brands with new customer engagement opportunities through balance reminders and location-based notifications.
Bousis said the shift toward retailer partnerships, three years in the making, has unlocked a new stage of growth that would be difficult to achieve with a marketplace-only model.
“There’s only a finite amount of inventory when you’re building a pure marketplace where individuals buy and sell from each other,” he said. “To really start scaling our company, we had to integrate with partners to unlock an unlimited supply.”
In July 2016, Raise acquired Slide, a New York-based mobile gift card wallet startup, establishing an East Coast presence in the process. Earlier this year, Raise also partnered with CashStar, the company responsible for gift card solutions for brands like Best Buy, Crate & Barrel and Starbucks.
As part of Tuesday’s Series C, ChicagoNEXT chairman Mark Tebbe and Accel’s Sameer Gandhi will join Raise’s board of directors. Gandhi’s previous investments include companies like Jet, Bonobos, Dropbox and Venmo. The latter was acquired by Chicago’s Braintree in 2012, which in turn was acquired by PayPal.
In addition to expanding its platform with new anti-fraud technology and features like shareable cards and wallets, Raise will spend part of the new funding to increase its marketing efforts and increase brand awareness. Bousis said the company currently has about 2 million customers, but he expects to grow that number substantially through a major marketing push.
Raise currently has around 240 employees split between Chicago, New York City and San Francisco.
Images via Raise.