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Raise has narrowed in on a frustration that has been plaguing consumers for decades: unwanted gift cards.
Their solution is a marketplace for consumers to sell and buy gift cards online. It's a solution that's caught fire and that investors are backing with serious money.
Raise announced Thursday a $56 million Series B round led by New Enterprise Associates, with additional investment from Bessemer Venture Partners (BVP), the Pritzker Group, Listen Ventures and angels investors. This latest round brings the company's total capital raised to $81 million.
The big potential that investors see in Raise is the two-year old startup’s ability to match unwanted cards with interested owners via its online marketplace. The company has created new liquidity in the gift card market by giving all parties involved reasons to participate: sellers get cash, buyers get a purchasing discount and Raise gets a 15 percent cut. To facilitate the gift card marketplace Raise has partnerships with over 3,000 brands.
The opportunity for buying and selling gifts is huge. According to Raise, approximately 20 percent of the $400 billion spent per year on gift cards goes unspent.
"It was an incredibly inefficient market," said George Bousis, founder and CEO.
It was. Now that Raise is unlocking the potential of unspent gift cards the company is taking off. In 2014 alone Raise sold over 1 million cards and revenue growth in November and December 2014 was over 50 percent, according to the company.
"A lot of it has to with optimizing the sell side of the market," said Bousis. "We basically figured out a way to digitize cards through tech we created."
But that growth wasn't just about technology better enabling a market. Consumer trust played a big role too.
"It all starts with trust and safety first. It’s not only important to have a liquid market but one that your customers trust as well." said Bousis.
Success in the next 24 months, said Bousis, will rely on "continuously focusing on brand experience and customers."
Customer service will be a key differentiator as there are several other gift card marketplaces fast on Raise's heels. Similar sites, such as Cardpool, GiftCardGranny, and CardCash amongst the dozens more have set out to accomplish the same feat. They will have a lot to overcome though, as none have yet to raise anywhere near Raise's $81 million in venture funding.
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