Gift Card Rescue
DEAL
EPISODE SUMMARY
🕓 Air Date: August 30, 2009
Asking For:
$150,000 for 30%
Investor:
Robert Herjavec, Kevin O'Leary (50/50)
Deal:
$200,000 for 50%
PRODUCT SUMMARY
GiftCardRescue provides a solution for unused gift cards by allowing customers to exchange them for cash through their online platform.
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Background Story
Kwame Kuadey, originally from a small village in Ghana, West Africa, relocated to Ellicott City, Maryland, with his wife and newborn daughter to pursue his American dream. His journey was shaped by humble beginnings, where access to basic amenities like electricity and running water was limited. Despite the challenges, Kwame excelled academically and was recruited into a management training program after college.
However, the economic downturn led to the discontinuation of his job, pushing him into entrepreneurship. Operating his business from home, Kwame found solace in working alongside his wife, creating a harmonious blend of professional and personal life. GiftCardRescue emerged as a solution born out of necessity and ingenuity. With a keen eye for opportunity, Kwame recognized the substantial market of unused gift cards in the United States, amounting to billions annually.
Inspired by this untapped potential, Kwame conceptualized GiftCardRescue, a platform that facilitates the exchange of unwanted gift cards for cash. His background in management, coupled with his entrepreneurial spirit and desire to provide for his family, fueled the inception of this innovative venture. Through GiftCardRescue, Kwame not only aims to address a prevalent consumer need but also to carve a path toward financial stability and fulfillment in his adopted home country. His journey reflects resilience, determination, and the pursuit of the American dream in the face of adversity.
The Product
GiftCardRescue offers a straightforward and convenient solution for individuals looking to monetize their unused gift cards. Through their user-friendly online platform, customers can easily input their gift card details to receive an instant offer, typically ranging from 65% to 70% of the card’s value. Once the offer is accepted, customers are provided with an address to mail their physical gift cards to GiftCardRescue for verification.
Upon receipt and verification of the gift card’s value, payment is swiftly processed and deposited into the customer’s PayPal account within 24 hours. The process is efficient and hassle-free, allowing users to quickly convert their unwanted gift cards into cash.
For buyers, GiftCardRescue offers an opportunity to purchase gift cards from a variety of popular retailers at a discounted rate of 10%. This presents a win-win scenario, as sellers receive cash for their unused cards, while buyers can enjoy savings when shopping at their favorite stores.
The platform’s curated selection of gift cards from approximately 200 national retailers ensures a diverse range of options for both sellers and buyers. With transparency and reliability at its core, GiftCardRescue provides a valuable service that simplifies the gift card exchange process for all parties involved.
How It Went
The company’s position before Shark Tank
GiftCardRescue has demonstrated promising performance and a strong position in the market since its inception. The company has built a reputation for reliability and efficiency, attracting both sellers and buyers to its platform. With minimal marketing efforts, GiftCardRescue has achieved sales projections of $120,000 annually, indicating a steady and consistent demand for its services. Partnerships play a crucial role in GiftCardRescue’s growth strategy. While specific partners may vary, the company has garnered interest from major online retailers like Amazon for potential collaborations, highlighting its appeal and potential for expansion.
As for wholesalers, GiftCardRescue primarily sources gift cards from approximately 200 national retailers, ensuring a diverse inventory that caters to a broad audience of sellers and buyers. This selective approach enables the company to maintain profitability by avoiding cards with low resale potential. GiftCardRescue’s customer base comprises individuals seeking to convert their unused gift cards into cash, as well as savvy shoppers looking to save money by purchasing discounted gift cards for their favorite retailers.
In terms of funding, GiftCardRescue initially sought investment from the Sharks on “Shark Tank,” securing a deal with Kevin O’Leary and Robert Herjavec for $200,000 in exchange for 50% of the business. This injection of capital provides the company with the resources needed to fuel its growth and further develop its platform. GiftCardRescue’s gross margin of 25% indicates a healthy profitability. The available capital from the Sharks’ investment will be instrumental in scaling the business and capitalizing on future opportunities. Currently structured as a privately-held company, GiftCardRescue is led by founder and CEO Kwame Kuadey, who oversees the company’s operations and strategic direction.
The Negotiations:
During the negotiation process on “Shark Tank,” Kwame Kuadey, founder and CEO of GiftCardRescue, initially sought $150,000 for a 30% stake in his business. Kevin O’Leary made the first offer, proposing $150,000 for a 50% equity share. Robert Herjavec then joined forces with Kevin, offering $200,000 for a 50% stake. This prompted Kwame to counteroffer, suggesting 40% equity for $150,000, citing the progress and potential of his business. However, both Kevin and Robert held firm with their initial offer.
Mark Cuban and Barbara Corcoran opted out of the deal, expressing concerns about the business model and valuation. Daymond John admired Kwame’s determination but ultimately decided to pass on the opportunity. With a decision to make, Kwame accepted Robert and Kevin’s joint offer of $200,000 for 50% of the business, recognizing the value of having two experienced investors on board. The negotiation showcased Kwame’s resilience and the Sharks’ confidence in the business’s potential, culminating in a mutually beneficial agreement that provided the necessary capital for GiftCardRescue’s growth while granting Robert and Kevin a significant stake in the company.
