Chicago-based Raise.com, a marketplace where consumers can buy and sell gift cards for cash, has raised $18.1 million in funding, according to a new SEC filing. The company declined to comment on who invested in the latest round, but has raised $4.5 million in earlier seed and angel rounds, we’re told.
The filing doesn’t reveal the investor lineup, listing only Raise.com founder George Bousis and board members Jason Pritzker (Yapmo founder) and Jeff Cantalupo (Listen.co founder and CEO). AngelList shows a few of Raise.com’s seed rounds, and reveals that Lon Chow of Apex Venture Partners is a prior investor.
Raise.com is one of the fastest-growing startups in the Chicago region. While we were able to reach founder George Bousis today to confirm the raise, the company prefers to keep a low profile when it comes to disclosing its funding details, and instead wants to focus only on growing its – what we hear to be – profitable business.
Raise.com itself is a spinoff from Chicago-based CouponTrade, a couponing and deals site founded in 2010 by Bousis and co-founder Bradley Wasz. In February of this year, the gift card side of that business became what’s now known as Raise.com, a domain name it took the company months to secure.
“It became a challenge from a consumer standpoint, to understand how gift cards, coupons and deals went together,” says Bousis. “We pretty much decided that because our motto was ‘Give Yourself a Raise,’ that the best natural name for the new gift card-only focused company would be ‘Raise,’ itself,” he says.
The company started in Bousis’ living room, tethering off his iPhone for the first six months, around two and half years ago. Today, it has grown to over 50 full-time employees, and is now aggressively hiring.
In its sights is the massive ($115 billion) gift card industry in the U.S., where roughly 20% of gift cards’ value sits unused every year. In addition, there’s some $200 billion in merchandise credit from store returns, which is another currency Raise.com can buy and sell.
How Raise.com Works
Today, the company offers a peer-to-peer marketplace for discounted gift cards, e-gift cards and store credit, ranging from everyday retailers like Walmart, Target, or Whole Foods to high-end brands like Louis Vuitton, Neiman Marcus or Gucci. The site offers discounts on over 500 stores at the moment.
“People can expect to save anywhere from 5% to 40% or more on everyday purchases across a variety of brands,” says Bousis. “We want people to think of shopping on Raise before they spend money at any store. Emotionally, we want them to always feel like they got a raise when they use our website,” he adds.
On the website, users can buy gift cards, or sell those they already have for cash, including physical cards, e-gift cards and merchandise credit with a minimum balance of $10. The cards can even be partially used and do not need to have an even balance to be listed.
To begin, verified sellers simply create an account, enter the required info like retailer, serial number, and PIN. For each sale, Raise.com takes a flat 15% commission, and they charge an extra $1 per physical gift card sale. Physical gift cards account for around 10% of the company’s sales. The site will cover shipping and handling fees, and provides prepaid shipping labels as needed. Sellers are then paid by check or PayPal, as specified. Buyers and sellers are protected by a 100% money back guarantee.
The company encourages sellers to discount their cards by at least 5%, but the actual price is up to the seller, as long as it’s not more than the gift card’s value. In the works is a gift card pricing tool which will calculate the best price, as well as a way to access your purchased gift cards through a scannable barcode you could show the cashier via your smartphone.
Since there’s no sales tax, shipping costs, or processing fees associated with buying these gift cards, for savvy shoppers, buying a card on Raise.com is like getting free money. This has made the site popular with a number of coupon bloggers, like the well-known Southern Savers and Hip2Save, for example, which have touted the site in recent months.
The company will use the additional funding for growth, marketing and advertising, and hiring – it’s adding around three people per week right now. But Raise.com is not yet ready to go international, as it wants to secure the U.S. market first.
[Image credits: Raise.com; Flickr/401K Calculator]