Gyft nabs $1.25M to digitize gift card industry

Tired of carrying around a bunch of Bed Bath & Beyond gift cards after your wedding? Download Gyft

It’s always interesting to see how old markets get revamped by digital media.  Gift cards, for example, are a superfluous piece of plastic in your wallet—and yet no one has come up with a better way to get somebody a gift that says “I didn’t know what else to get you, so I got you a Chili’s gift card.”  But Gyft is looking to shake things up.

Gyft, which launched Tuesday, is a mobile app that acts as a digital wallet for your gift cards.  You can send and receive digital gift cards on your 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.  In other words: no more plastic.

One thing I like about buying gift cards for special occasions is the fact that I can do it at the absolute last minute—like when I’m driving over to the person’s house.  Gyft makes getting someone a gift card as easy as scrolling through a list of participating retailers, finding the one you want for the amount you want, and sending it via text, email, or Facebook.

Brands also have an incentive to get on board, as Gyft offers them a unique glimpse into the consumers who are carrying their gift cards, which allows them to tailor promotions to those consumers’ interests.  They can also send reminders and special offers.

Gyft has already partnered with more than 100 retailers, including Amazon, Sephora, Brookstone, and Lowe’s, among others.  Getting the product to function with the various backend providers proved to be something of a challenge, the company says, as each retailer has a different backend.  The company makes money by taking a cut of the sale of each gift card.

While the company doesn’t yet have a native Android app (it plans to have one in the future), Android owners can still receive gift cards through Gyft using their Android Web browser.

The company launched with $1.25 million in financing from Google Ventures, Founder Collective, and 500 Startups.

“Gyft has developed a consumer app that leverages the advantages of mobile devices for millions of shoppers,” said Joe Kraus of Google Ventures, in a statement. “We look forward to working with the Gyft team to build out an exciting product that addresses a huge market while changing the way consumers and retailers use gift cards.”

Gyft plans to use the funding to scale the company, boost product development, and expand its partner ecosystem.