Gift cards are big business. Consumers acquire an estimated $400 billion worth from retailers every year. But annually, about 30 percent of gift-card value goes unspent--in part because it's so easy to forget about that piece of plastic you've tucked away in a drawer. Enter Raise, a Chicago-based company that offers consumers the chance to sell gift cards they don't want and buy others they do at a discount. Even better, with its new mobile app, Raise lets consumers grab discounted cards as they wait in line to make a purchase. The three-year-old company brokered the sale of one million cards in 2014 and has raised more than $80 million in funding. George Bousis, the 28-year-old founder and CEO of Raise, spoke to Inc. about how he got started.

Big Ideas While Bagging Groceries

I became interested in gift cards when I was helping in the family grocery stores after college. My parents are immigrants from Greece who have worked hard their whole lives to support the business, Cermak Fresh Market, a chain of 15 stores in the Chicago and Milwaukee areas that they started in 1987. Working in the deli and bagging groceries, I studied what people bought and how we could stock inventory more effectively. This allowed us to grow our margins from 2 percent into double digits in just a few years' time.

I also started exploring ways to generate additional revenue, which led me to the idea of a gift-card program. Before 2009, what retailer wouldn't like gift cards? You could sell $100 of store credit, and whatever the customer didn't use lapsed after 12 months. But things changed when Congress passed the Credit CARD Act of 2009, which prevents retailers from retiring gift cards in one year and booking that money as profit. Before that, up to 25 percent of gift-card credit expired each year. Now, gift cards are considered a liability on the balance sheet, and they can't be voided for at least five years. Many stores have begun to offer gift cards that never expire, and currently just 2 percent of gift-card value is retired each year.

Around the same time, gift cards were going digital and mobile. I put two and two together and realized this was certain to become a massive market. With marketplaces like Uber and Airbnb gaining attention, the gift-card market was ripe for disruption. Many people overlook the fact that stores don't give cash back for returns anymore. They give you cards with store credit. I saw a chance to offer people liquidity for this asset in the sock drawer, to pay them for something they weren't using.

Living Room Experiments

I thought this was the optimal time to do something new and start my own business. I was 23, unmarried, and didn't have kids. I had some money--I was a professional computer gamer as a kid. I had sponsors and flew around the country to play in tournaments. So I took the money I had saved from gaming, holidays, graduations, and birthdays--and in 2011 launched what would become a gift-card exchange.

I began by hiring people from Craigs­list as contractors, and started the company in my living room. Then I bought gift cards at full price from grocery-store racks and sold them at a loss to understand the liquidity in the market. I could see how cards got priced and what kind of discounts sold best. I learned how people paid for cards, how they priced their cards, and how the cards were redeemed.

Building a Marketplace

It was all an experiment, and I eventually ran out of money. My dad wasn't thrilled that I had left the family business, so the only person I could realistically count on to help me was my mother. She agreed to become my first angel investor and write us our first outside check. In 2011, we had raised a total of $600,000 in seed funding, between my money, my mother's, and that of our first outside investor, Jeff Cantalupo. We raised $2 million from other angels in 2012.

Raise officially launched in February 2013 with 15 employees. Before that, I had to do some negotiating to buy the URL. The guy who owned it wanted $1 million, which we couldn't afford. After some back-and-forth, I made a take-it-or-leave-it offer of $40,000. He took it.

The business got going from there, and every month was better than the last. In the fall of 2013, we raised $18.1 million Series A. In January, we raised another $62 million.

How It Works

At Raise, we take a commission of 15 percent from the listing price once a gift card sells. Discounts on cards vary, depending on the retailer as well as on the supply and demand of the market. The average discount is 16 percent and the average purchase is $200, meaning our buyers save about $32 every time they shop with us. Our web users average 12 purchases a year, but mobile is quickly outpacing this number, with three to four purchases made every week.

We see our cards going 100 percent digital in the next 24 months. Our app offers a digital wallet that holds the gift cards you purchase on Raise, as well as those you receive as gifts. The app will even remind you what cards you have via push notification when you visit a store.

Winning Over Retailers

The relationships we have established with retailers may surprise people, but brands see us as a friend. We help motivate their customers to visit stores, where 90 percent of retail transactions still occur--and we motivate them to spend more money.

Instant Gift Cards

Instant gratification is now the key driver of our business. We give people the chance to buy and sell cards almost instantly, right on their mobile device, for groceries, restaurants, movie theaters, and coffee runs. I love the feeling of helping people and providing the most value possible for them. Why would consumers pay full price when they can use Raise to get instant savings or to put cash back in their pocket? It's a no-brainer, and it creates a win-win-win, for retailers, buyers, and us.

Gift cards, past and present

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• Gift cards as we now know them began around 1994. Currently, they represent an estimated $400 billion business.

• Retailers like gift cards in part because about 30 percent of their value goes unspent annually.

• At the same time, they want foot traffic (or its digital equivalent), because people will buy, on average, about 43 percent more than the value of the card.

• That's why retailers don't mind what Raise is doing--it's actually making the overall system more efficient without directly taking away from their revenue streams.

From the June 2015 issue of Inc. magazine