Another high-potential startup has been lured to Birmingham, AL by early-stage investor Alabama Futures Fund (AFF), which recently helped attract a legal tech startup from Atlanta. This time, fintech startup Prepaid2Cash, a company which buys back prepaid and gift cards from consumers for cash, will relocate its headquarters from San Francisco.
Prepaid2Cash was founded three years ago by two financial industry colleagues with experience in private equity, investment banking, and financial analysis. Peter Vogt and John Gushman realized that the “free money” situation that prepaid Visa, Amex, or Mastercard cards seemed to provide was actually laced with conditions.
Prepaid cards often contain hidden monthly fees that erode their value if they aren’t used right away. They can only be used to purchase things, not pay rent or deposited into a savings account. And they’re not accepted everywhere, particularly when it comes to e-commerce retailers.
Gift cards, which can only be spent at a single retailer, were even more inconvenient in the eyes of Vogt and Gushman.
“Our cash was being held hostage by little plastic cards. We knew there had to be a better way and it was time for us to do something about it,” the team explained in a 2018 blog post.
The P2C mobile app allows consumers to exchange gift and prepaid cards for cash. Rather than a marketplace to sell cards, which other startups have created to varying levels of success, P2C’s bank partnerships allow a consumer to upload their card’s information and 24 hours later, receive a direct bank deposit or check.
The company earns a small flat fee, which depends on the type of card, off the transaction.
The startup does not release exact figures, but says they have processed millions of dollars in transactions and have tens of thousands of app downloads since 2017.
Similarly, they don’t release amount of total funding raised and the AFF investment is of an undisclosed amount. AFF’s website does say that their ideal companies have a path towards milestones leading to series A financing within 12-24 months after initial investment, which CEO Vogt tells Hypepotamus is in their tentative plans.
“The AFF is looking for companies that can scale rapidly, are actively deploying technology to disrupt or improve current marketplaces and whose founding teams are ambitious,” says Matt Hottle, Redhawk Advisory partner and the Investment Manager for AFF.
“Prepaid2Cash represented all of those things. Additionally, a move to Alabama was strategically advantageous considering their stage of development and growth strategy.”
Vogt says they plan to hire in the customer success, marketing and technical teams in Birmingham.
“We are excited to join the burgeoning tech community in Birmingham,” said Vogt. “We were blown away by the ample resources and support available to a growing business like ours. This gives us confidence in our ability to scale our company and access new customers and tap regional connections.”
In addition to the move and hiring, the startup is working on adding features for consumers on the app, as well as opening up a version for B2B partners.