Author: Weilin, PANews

On February 26, according to Fortune, the crypto gift card platform Raise announced the completion of a $63 million strategic financing round led by Haun Ventures, with participation from Paper Ventures, Selini Capital, GSR, and Raj Gokal, co-founder of the blockchain Solana. Although the company did not disclose the valuation for this round of financing, the amount raised and the background of the investors have drawn attention.

This round of financing brings Raise's total funding to over $630 million, with previous investments from Accel, Paypal, and New Enterprise Associates (NEA).

Transitioning from Traditional Gift Card Trading Platform to Web3

Raise was founded in 2013 by George Bousis. At that time, Bousis, who had just graduated from college two years earlier, noticed the oversaturation of gift cards in the U.S. market, but consumers had no place to sell them. Thus, he launched a platform that allowed users to trade discounted gift cards from Fortune 500 brands like Airbnb, Walmart, and Instacart. Since then, Raise has facilitated over $5 billion in gift card purchases and sales on its platform.

In his view, the gift card industry, like many payment infrastructures, has a chaotic situation with many companies overlapping and intertwining, including payment processing companies, card manufacturers and distributors, issuing banks, and compliance firms.

However, with the maturation of blockchain technology, Bousis realized that blockchain could bring deeper changes to the gift card industry—not only eliminating intermediaries and reducing transaction costs but also enhancing transaction security and preventing gift card fraud.

Currently, Raise has three products: the Raise App, API solutions, and a gift card trading marketplace.

"I started exploring the tokenization of gift cards as early as 2014," he said. He realized that issuing blockchain-based gift cards in the 2010s was impossible, but he kept an eye on the crypto industry. By 2022, he believed the technology had matured enough to embrace this transformation. He stated that over the next two and a half years, the company's investment would be around $25 million, funded by the company's profits and balance sheet, to build the blockchain platform.

George Bousis believes that blockchain technology can simplify the payment systems that have existed in the gift card industry for decades. He stated that he would ultimately invest over $100 million to create what he calls "smart cards."

Collaborating with the Polkadot Community Foundation to Support Crypto Wallets

Unlike the habits in Asian countries, gift cards have almost become a "necessity" for American consumers during the holiday season, often surpassing popular items like AirPods, PlayStation, or trendy vinyl albums as the preferred holiday gift. According to market data, about 40% of consumers' total holiday spending goes towards purchasing gift cards. The popularity of gift cards is not only due to their convenience and flexibility but also because they meet the needs of both the giver and the recipient.

After consumers purchase gift cards, they typically redeem them within six months, with a redemption rate exceeding 70%. However, over time, the usage rate of gift cards tends to decline. Research shows that less than 80% of gift cards are redeemed a year later.

In Raise's crypto gift card process, consumers purchase gift cards from participating retailers, deposit funds into Raise, which then uses stablecoins to hold these funds for the retailers. Once customers use the gift cards, Raise transfers the funds from the escrow account to the retailers via ACH (an electronic payment network in the U.S.) or stablecoins. Bousis noted that the current payment process is influenced by constantly changing regulations.

Bousis believes that this system (which will ultimately be decentralized through a nonprofit organization and cryptocurrency) is cheaper than the current gift card payment infrastructure. Moreover, since records are stored in a permanently ungoverned database, this is expected to make the system more secure and prevent fraud. Currently, Raise only issues digital gift cards and does not issue physical gift cards.

Raise has already expanded into the blockchain payment industry through its collaboration with the Polkadot Community Foundation (PCF) and plans to integrate into the DOT Wallet. Additionally, the company has partnered with WalletConnect to add support for digital wallets like MetaMask, Phantom, and Coinbase Wallet by August 2024.

Bousis stated that retailers are very interested in this. Although he did not disclose which specific retailers, he mentioned that he is working with Fortune 500 companies and "the biggest brands."

With the announcement of the financing news, Raise welcomed new board members. The board includes former crypto industry executive Marco Santori, who was the Chief Legal Officer at the crypto exchange Kraken, and Bjorn Wagner, who was the CEO of Parity Technologies (the company behind the Polkadot blockchain). Additionally, Raise appointed George Ruan, co-founder and former CEO of Honey, and Matt Maloney, founder and former CEO of GrubHub.

Bousis declined to disclose the valuation of the company during the financing. He stated that the financing valuation would not be lower than the valuation of the startup during its Series D round, which PitchBook data showed was $675 million at that time. This financing includes primary and secondary equity sales as well as token subscription rights (where crypto startups commit a portion of unreleased cryptocurrencies to venture capital firms). He also mentioned that raising $63 million through crypto investment was not due to a funding shortage, as Raise has been operating profitably for over a decade. The payment process in the gift card industry may thus be on the verge of transformation. In the future, with strong financing support and extensive retailer collaboration, Raise may bring new growth catalysts to the Web3 consumer market.

References:

https://fortune.com/2025/02/26/exclusive-raise-nets-63-million-in-round-led-by-haun-ventures-to-build-a-crypto-platform-for-gift-cards/

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