Gyft, a company building a digital platform to bring the plastic gift card industry to both web and mobile, has raised $5 million in Series A funding in a round led by Karlin Ventures, with participation from A-Grade Investments, Chamath Palihapitiya’s Social + Capital Partnership, Hass Portman and Yammer founder David Sacks. The company previously raised $1.25 million in seed funding from Google Ventures, Founder Collective, and 500 Startups, around the time of TechCrunch Disrupt SF 2012, where it was competing as a finalist.
Founded in early 2012 by Vinny Lingham (CEO) and CJ MacDonald (COO), Gyft first launched as a mobile application for iPhone that allows users to add their plastic gift cards to a mobile wallet of sorts. Here, they can then track their balances and receive notifications of offers and other discounts, designed to encourage them to spend their balances with the retailer. As the company explained at the time of its launch, a 2010 law made it so that retailers can’t actually book gift card revenue as sales until the cards are redeemed. That gives retailers a lot of incentive to work with a startup like Gyft, which can help them target those carrying around unused gift card credit.
Since its debut, the company has also expanded to web and Android, and introduced features like re-gifting options, APIs, bitcoin support, and, most recently, a new gift card registry option, which is something like a “wish list” for gift cards.
Today, the company is working with more than 300 retailers, and has seen over $10 million from 200,000 plastic gift cards uploaded to its platform. According to MacDonald, Gyft is now on track to sell over $5 million in gift cards this year, and is adding new cards at a rate of one card every two minutes.
In the near-term, he says the team will be using the additional funding to help it focus on building geo-targeting features into its apps, meaning retailers could send messages to shoppers holding balances when they’re actually near the store. This will likely arrive around or ahead of the holiday shopping season, alongside a refreshed look for iOS 7. In 2014, Gyft will introduce other features, including a card-swapping option (perfect for exchanging gift cards after the holidays) and will expand internationally.
The team is currently 14 in total, mainly engineering and product. They may add a couple more hires with the new funding, but MacDonald says they actually want to keep things fairly lean as they focus on what he says is a market “ripe for disruption” – the $100 billion gift card market.
To date, the company has declined to discuss customer numbers or revenue, pointing instead to the number of gift cards on its system and their value.
Gyft is about to hit its biggest season yet, as the 2013 holidays approach. More than 50 percent of annual gift card sales occurs in the fourth quarter, the company tells us. And Gyft hopes to tap into some of those sales within its own application and online.
“We are expanding the way consumers use gift cards and retailers think about their gift card programs,” MacDonald explains. “The current model of breakage does not work for consumers or retailers. Consumers often forget that they even have gift cards and the dollars go unused and retailers have no idea where these cards reside or who is holding on to them.”