Is there anything quite as outdated as a plastic gift card? With the world quickly going digital, and people using their phones in lieu of their credit cards, why should they still be walking around with plastic gift cards stuffed into their wallets? It's an incredible waste of space.
Gyft is trying to change all that. A mobile app that acts as a digital wallet for your gift cards, the company has now raised a $5 million Series A round of funding, the company announced on Wednesday.
The funding came from new investors Ashton Kutcher's A-Grade Investments, Social+Capital Partnership, Karlin Ventures, Haas Portman and entrepreneur David O. Sacks. The company previously raised a seed round of $1.25 million in September of 2012. This latest round brings the company's total raised to $6.25 million.
Gyft says that it plans to use the new money to continue development, as well as scaling the business. It will also begin expanding to markets outside the United States, specifically in Canada and the United Kingdom, Gyft CEO and Co-founder Vinny Lingham, told me in an interview.
Markets such as Europe and Asia are in the company's sights, he told me, but Gyft will only enter into them "when the conditions are right."
"The gift card space is growing, but the space just isn't mature enough in some countries at the moment," he said.
Gyft allows users to send and receive digital gift cards on their iPhone, and even upload physical gift cards by entering the gift card number. The digitized gift cards can then be redeemed in-store or online. Users can track their balances, and safely store their card info with password protection. Cards are stored on the cloud, so that they can be accessed from any browser.
Users also have the option of sending gift cards to their friends; they can even regift their own cards. Users have the option of send a video message with the card, and can also get Facebook birthday notifications to know when to send them.
The company seems to be standing on the edge of giant opportunity. Right now, over 99% of gift cards that are sold are plastic, Lingham told me. In the next ten years though, he believes that at least 80% of them will be digital.
And while others, like Square and Google Wallet, have tried to break into the space, "none of them have been successful so far."
Lingham attributes the success of Gyft to the company's focus on both the consumer and the design.
"After we launched, we spent the next six months polishing up the app, and listening to what our customers wanted," he said.
For example, the company found that many customers wanted to know if the person they were sending the card to had received it, so the company added the ability to track the cards.
To Lingham, though, the reason that other companies have not been able to successfully enter into the space is simple: "they were delivering a substandard product."
The San Francisco-based Gyft currently works with more than 300 retailers, including Sears, Groupon, CVS, Crate&Barrel, ToysRUs, GameStop, JC Penny, Burger King, Regal and the Gap.
Retailers have a big incentive to work with Gyft, he noted: they can’t book gift card revenue as sales until the cards are redeemed.
While Lingham could not disclose how many customers Gyft has, he said that it is approaching one million, and that he expects to top that number by the end of the year.
(Image source: http://www.gyft.com)