Lifesta lets people resell their unused Groupon coupons. Can it raise $1.5 million?
Low Overhead: Lifesta's co-founders, Yael Gavish and Eran Davidov, run their company out of a café in New York City.
The Pitch: "Sites like Groupon that offer daily discounts from local businesses have exploded in popularity. But a lot of people who buy vouchers never end up using them. Lifesta provides a trustworthy platform for users to buy and sell these unused vouchers online. Sellers set prices for the vouchers. We take a percentage of each sale and ensure that the vouchers are valid—if not, buyers get their money back. We've had 50 percent sales growth per month, mainly through word of mouth. We're raising money to launch a national marketing campaign and hire staff."
CO-FOUNDERS: Yael Gavish and Eran Davidov
LOCATION: New York City
LAUNCHED: July 2010
2010 PROJECTED REVENUE: $40,000
2011 PROJECTED REVENUE: $4 million
WHAT LIFESTA CHARGES SELLERS: Eight percent of the sale price, plus 99 cents per transaction
Test Other Revenue Models I think there is a good opportunity to create a secondary market around group discount sites. But it seems as if Lifesta should be able to get more from its customers than just 8 percent of each sale plus 99 cents per transaction. I think the company should test alternative revenue models. Perhaps Lifesta could buy unwanted vouchers from consumers at a discount and then sell them at a profit. There are no barriers to entry with this type of business, so it all comes down to execution. Anyone who invests in this company is essentially betting that the founders will be able to outdo potential competitors.
Jon Chait partner, Dace Ventures Waltham, Massachusetts
Form Strategic Partnerships Secondary markets are a great space. Sites that let consumers resell gift cards, for example, have done exceedingly well. I am worried about the low barriers to entry, however. This is something that sites like Groupon could do themselves. The key will be quickly getting enough buyers and sellers that Lifesta becomes a very active marketplace. I think partnering with coupon sites and deal aggregators would help. Also, I think Lifesta could bring in more repeat users if it developed a way to let people track when their coupons are about to expire—and sent reminders to post them for resale.
Danny Schultz co-founder and managing director, DFJ Gotham Ventures New York City
A Promising Business I'm always a little skeptical of businesses based on aggregation, but this is quite an interesting idea. Lifesta is guaranteeing the validity of its listings and facilitating transactions, which is more valuable than simply compiling deal listings. StubHub, for instance, became successful by being a safe intermediary for reselling tickets. I worry, though, that Lifesta's customers are people who use sites like Groupon heavily. I'm not sure whether that segment of customers is large enough to provide outsize returns. But if Lifesta can reach critical mass, it could possibly offer its own exclusive deals.
Dan Ciporin venture partner, Canaan Partners Westport, Connecticut