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Gift card marketplace Raise.com confirmed Tuesday that it raised (heh) $18.1 million from Bessemer Venture Partners. As part of the deal, BVP all-star partner Jeremy Levine joined the board.
Levine is the man who makes unsexy bets that no one else understands and then profits handsomely from them. He was one of the first to put his weight behind then-scrappy-scrapbooking-startup Pinterest, leading its Series A in 2011. Before raising that round, the product was dismissed by others as not having a mass market value or technical co-founders. Now, four years later with Pinterest holding a $5 billion valuation and potent traffic referral power, Levine is the one laughing.
Levine spots fledgling stars where other people miss them. That’s why you shouldn’t be too quick to dismiss Raise.com, which has a premise is so dull it rivals coupon company RetailMeNot.
Raise.com is a marketplace for gift cards, where people can sell the gift cards they have on hand that they won’t use, and others can purchase them at a discount. For example, if your mother gives you a $100 Williams Sonoma gift card but you only use your oven for shoe storage space, you can sell the gift card for $90 (or whatever price you choose on Raise). Your mother never has to know. The purchaser, in return, gets a $100 value at a $90 price.
The product becomes particularly compelling today with the introduction of Raise’s mobile app. Because the gift cards can be sold, bought, and used via their electronic number – you don’t have to ship the actual card to its buyer – that means customers can surf the app while standing in line at a particular store. If you’re at Target, you might look to see if there’s a Target gift card, buy it at a discount, and use it right then and there.
“In many ways it is easy to dismiss it as being this trivial use case,” Levine said. “But the market for gift cards is ten to 100 times the events industry. Over $100 billion in gift cards are issued every year.” He didn’t want to dive too deeply into Raise’s product roadmap, but hinted that the company could introduce a consumer data play down the line. With physical gift cards, companies don’t know much about the consumers purchasing them because these transactions usually occur offline. A company like Raise could collect extensive data on buyers, which in turn could benefit retailers.
Raise also fits Bessemer’s marketplace thesis. There’s money to be made by reinventing Craigslist categories – Airbnb did it for temporary housing, StubHub did it for event tickets, Reverb is doing it for musical instrument sales. Why can’t Raise do it for gift cards? “It’s another internet platform that empowers the individual consumer,” Levine said.