Can a gift-card exchange be worth a billion dollars? That seems to be the case with Raise, which just pulled in another $56 million, barely two months after an $18 million round in November.
The newly closed Series B round was led by New Enterprise Associates, along with Listen Ventures, the Pritzger Organization and Bessemer Venture Partners. The new funding values the two-year-old Chicago company at “just shy of a billion” dollars, Raise CEO George Bousis told Re/code.
While gift-card exchanges are nothing new — and big retailers are increasingly playing the we’ll-buy-competitors’-gift-cards-game — Raise seems to have found a sweet spot. Raise is seeing a large amount of usage in-store, with shoppers buying discounted digital gift cards on their phones that they immediately use to make a purchase.
“We think mobile usage here is the killer app for the company,” said New Enterprise Associates general partner Tony Florence.
Raise passed $10 million in monthly gross card sales several months ago and has been growing more than 10 percent a month since then. Users sell their unwanted gift cards from stores like Gap, Nordstrom and Chipotle at discounts from face value ranging from as little as 4 percent to as much as 23 percent. Raise takes a 15 percent cut of the selling price.
About 94 percent of the gift cards are passed on to the buyer in digital form with identification codes and a barcode for in-store scanning, so Raise has no need to store physical inventory in those cases. If the physical card can’t be rendered in digital form, Raise just has to provide prepaid postage to sellers.
With the new investment, Bousis said his company will start to invest in advertising, which it hasn’t before, and continue to hire technical talent. Bousis said the company is also working on partnerships with the retailers whose cards are sold on the site to tell them where else their customers are shopping. That could lead to Raise offering marketing services.