Barely a month ago, Bank Innovation began investing in FinTech startups. Yesterday, our first investment, in Giftly, exited in a sale to GiftCards.com.
We didn’t even have a chance to announce that we made the investment before CEO Tim Bentley and company sold out to GiftCards for an undisclosed price.
Giftly launched in March 2011, and unveiled its website in September of that year. Its mobile app, which is the real strength of Giftly, was launched last September.
As of last month, the Giftly app had been downloaded around 50,000 times.
The company has raised $2.8 million to date.
Bank Innovation will be making up to 10 investments at a time in FinTech startups. We are looking for startups that:
- Solve a big problem;
- Possess an exceptional strategy for solving that problem;
- Are helmed by a strong management team;
- Have a financial services focus; and
- Are targeting an area/sector/market with manageable competition.
Giftly fit those criteria. Giftly allows users to easily gift anything, not just a particular product (like a Starbucks coffee from the Starbucks app) or a generalized credit (like an Amazon gift card). While we think the redemption process can be better, it’s still a great app. The opportunity is big for Giftly, which is run by Tim, a former Goldman Sachs banker, since the gift card industry is a $100 billion market. We haven’t seen anything quite like Giftly to date.
GiftCards.com — it’s all yours.
I read Bank Innovation daily, but I’m a little concerned. Isn’t there a potential conflict in you making investments in the same vertical where you report on innovative practices and industry leaders?
That’s a fair question and we welcome it. Thank you for sharing it.
Let’s first state a principle: we disclose any investment we make. The fact is, we never wrote about Giftly previously, so there was no opportunity for us to disclose the investment. We have no other investments to date.
Beyond this principle, we want to make it clear that we do not claim to be unbiased. We began Bank Innovation after the credit crisis with a clearly stated agenda: to advocate for banking innovation. We see these investments as being a part of that effort. We are no longer just writing about how financial services should innovate; we are funding ventures that can advance financial services. We are, in the end, a blog — and blogging to us means sharing our opinions.
The underlying premise behind your comment (by our interpretation) is that we might write something that is not true or slanted because we have an investment in a company in which we own a stake. (Just to be clear, the investments we are making in these companies are not of a size that gives us any say in their direction. We had absolutely no say in Giftly’s operations or strategy. We found out that Giftly was selling to GiftCards.com when you did — when Giftly issued a press release.) You may not agree with this, but we feel like having skin in the game will force us to do a better job, to work harder to seek the truth. What greater evidence of our true feelings about an innovation or startup than our investment in that innovation or startup? We can say with absolute certainty that even this one investment in Giftly caused us to think about it, its innovations and the gift card space in a much deeper way than we had previously. We tested Giftly not just to see if it works, but to see if we should invest our money into it. Nothing focuses your attention quite like the possibility of losing money.
With the disclosure, you as our cherished reader can determine whether we are in some way being promotional about our investments. If there is even a whiff of promotion in our writing, I hope you will call us out, but we are fully aware of how sophisticated are our readers. We have absolutely no illusions about that.