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Flipswap, a cell phone recycling and trade-in web site, says this morning it is raising $14 million from NGEN Partners and RRE Ventures. The three year old site is one of several e-cycling services that have raised money in the last several months in order to expand and bring in more users.

flipswapWe’re getting overwhelmed by all the options out there for what to do with your janky old cell phones and gadgets. Earlier this week it was startup Second Rotation, which raised $6 million for its gadget buyback program Gazelle. This morning Flipswap, a site targeting cell phone trade-in and recycling, said it is raising another $14 million. The funds will come from NGEN Partners and RRE Ventures.

The biggest hurdle for companies like Flipswap and Second Rotation is bringing in enough users. That problem is largely a marketing and business development issue — both getting the word out and also making strong deals with large members of the recycling and reselling value chain. Flipswap, founded in 2005, says it has traded in or recycled only around 700,000 mobile devices in its lifetime, though it has deals with 6,000 retail locations and Amazon. Competitor ReCellular says it is on track to recycle/resell more than 6 million phones in 2008.

Flipswap says its software, which enables the customer to receive an instant credit for the old phone, is one reason why consumers will choose them — in a world where consumers need instant feedback it gives a “clear economic incentive” (as the company describes it). Flipswap then evaluates the phone or gadget model and determines whether it can be resold or should be recycled.

Unlike Second Rotation’s Gazelle, Flipswap is geared not only toward those that want to make money off their gadgets, but users that also actively want to recycle phones. The site is covered in green imagery and the service includes the reLeaf Program which will plant a tree for every recycled phone. But even on the do-gooder front there’s competition.

ReCellular is one of the oldest and largest cell phone recyclers/resellers. In August the Dexter, Mich.-based company also said it had raised $15 million to help grow its operations. ReCellular says its revenues have already grown an average of 25 percent per year for the past eight years.

All the competition is a good thing for the planet and for consumers. According to studies from Nokia only 3 percent of cell phone owners recycle their devices, and some 50 percent are unaware of cell phone recycling options altogether.

By Katie Fehrenbacher

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