Raise wants to be more than a place to sell those Barnes & Noble gift cards your aunt gives you for Christmas, and the Chicago startup just raised a big new round of funding to become a mobile payment alternative to cash or credit.
Raise announced Tuesday that it has raised a $60 million Series C round of funding, led by Accel, with participation from PayPal, NEA and Bessemer Venture Partners. The new round brings Raise’s total capital to $147 million since it launched in 2013.
“We believe [Raise] can become a $100 billion payments company.”
The new cash comes with some lofty goals in the payments space. Raise began as a peer-to-peer marketplace for buying and selling gift cards. It still does that, but it now also partners with businesses who list their gift cards on the site to increase inventory.
CEO and Founder George Bousis said this gives Raise a virtually unlimited supply of gift cards to sell, which has led to a big increase in users. Raise has more than two million active users, and just recently crossed $1 billion in cards sold on the platform.
The uptick is thanks to the nearly 400 brands, including Subway, Dell, Barnes & Nobel and Toys ‘R’ Us, that list cards on Raise. By selling discounted gift cards on Raise, brands are able to target and acquire customers more effectively than by Google and Facebook ads, Bousis said.
Raise says customers save an average of 12% when they buy a gift card on the platform, and users have collectively saved more than $140 million.
With millions of dollars of gift cards available on the platform, Raise has evolved from a marketplace into a payments company, with customers using the Raise app as an alternative to a credit or debit card. Users purchase discounted cards on the app, and use the digital gift card to save money on goods. This has allowed Raise to effectively become a mobile wallet, letting users pay for items with their gift cards, right from the Raise app.
“We believe pre-pay is the single largest opportunity in the world of payments today,” Bousis said. “We believe [Raise] can become a $100 billion payments company.”
That ambition has led to interest from Silicon Valley, with repeat investors Accel and NEA putting more money into Raise (both were involved in the startup’s Series B). The new face in this round is PayPal, which has a history of doing deals with Chicago payment companies. It acquired Braintree in 2013 for $800 million.
Bousis wouldn’t go into detail about what PayPal has in store for Raise, but he called the company “some of the most intelligent, innovative, aggressive group of people in payments right now.”
With the round of funding, Accel’s Sameer Gandhi is joining Raise’s board, as is Chicago entrepreneur Mark Tebbe.
“Raise has built a strong, thriving marketplace in just a few years, which is an impressive feat — but this is just the beginning,” Gandhi said in a statement. “Raise has the unique potential to reinvent the entire mobile payment experience. We are excited to see this opportunity unfold and be a part of this incredible growth.”
Raise doesn’t want to just help people buy discounted gift cards; it thinks it can completely reinvent traditional shopping behavior. It sounds like an outlandish goal, but Raise presents a compelling case for shoppers to use its app. If you’re shopping at Lowe’s, why not buy a discounted card on Raise and save a few bucks on something you were already planning to buy anyway.
It has the benefits of a cash-back rewards system you’d find with a credit card, without the potential downside of going into debt. (Not to mention, not everyone can qualify for credit.) And Raise’s mobile wallets are also transferable, meaning a husband and wife, using an iPhone and Android, can purchase from the same account.
Bousis said mobile represents about 50% of Raise’s business today, and expects that number to eventually climb to 80-90%.
Raise currently employs around 220 people in Chicago and New York.