You probably own a few credit cards and have no clue what their true potential holds. We know (somewhat) about the miles, but what about cash back on purchases, dining, lodging and reward points! Your credit cards have a lot to offer and you are still looking on Groupon to save money instead of at your credit card benefits. This is precisely why Kard was created; to help you take advantage of YOUR rewards. With simple notification Kard is informing you on how to purchase using a little more smarts.
AlleyWatch speaks with Kard, the 6 month old company about their first round and how they are hoping to save you money.
Who were your investors and how much did you raise?
We closed a $600,000 round of funding from a diverse group of angel investors and high net-worth individuals, including Ron Moelis of L+M Development Partners, Arthur Becker of Zinio, Ryan Flynn of Nucleus HG, and Bill Gray formerly of Ogilvy & Mather, among others. We were fortunate enough to bring on investors and advisors that not only have experience investing in early stage ventures, but that also bring expertise in building startups, marketing, finance, and who have the networks and experience to be instrumental in helping Kard build partnerships with merchants and financial institutions.
Tell us about your product or service.
Kard is simplifying the world of credit card rewards. Credit card companies have long offered consumers 2x dining, 3x travel, 1x everything else, etc. Over the last 5 years, new types of rewards have proliferated the market offering consumers the ability to earn 20-50% back on their money in cash back and credit card rewards through targeted, merchant-specific rewards.
Kard is building mobile and web applications to make consumers aware of the best deals available to them, wherever they’re shopping, across all of their credit cards. By taking advantage of our products, consumers can save 7-8% on their money, or the potential to earn over a thousand dollars a year in rewards and cash back!
What inspired you to start the company?
Like many of my best ideas, the inspiration came from my girlfriend. We moved into a new apartment about a year ago and had to buy a bunch of new furniture, glassware, a TV, etc. We both used each of our go-to cards, the cards we use for most purchases for no reason other than habit. About a month into our move, after buying our new (and expensive) TV, my girlfriend found out that she had a deal on one of her other cards that would’ve given us 5% back on that single purchase instead of the 1% we received. That equated to $75 just on that purchase alone! That got me thinking…what other deals have we missed out on. After reviewing our purchases from the move, I found that we could have saved hundreds just from our big move! I wanted to build something that would ensure that I, and everyone else, would never miss out on these savings again.
How is it different?
Kard takes a holistic approach to the problem of credit card rewards. Other companies have tried to help you maximize the broader categorical rewards, (i.e. 2x dining, gas, travel etc.), with max savings of 5%. However, no company has capitalized on the merchant specific rewards that card issuers now offer (up to 50% return on your money). By incorporating these rewards, we can earn our users an average 7-8% annually on their money.
What market you are targeting and how big is it?
We are targeting the market for credit card rewards. Card networks and banks distribute $16 billion in rewards each year in the US alone. Card issuers are facing intense competition, both from within the industry as well as from new technology, and are therefore in need of a way to better incentivize their cardholders. Kard intends to be the catalyst to drive that.
What’s your business model?
It’s very simple. It’s completely free for consumers, and we make commissions from purchases that we drive for merchants. Kard is driving purchases, and we are able to take a cut from each purchase that we drive for merchants. We are also providing value to credit card issuers & banks and are exploring revenue channels directly with them as well.
Do credit card companies have a vested interest in letting consumers maximize their rewards through your platform??
Yes, they do. Credit card companies offer merchant specific rewards as a value add to their merchant partners. However, with consumers not aware of these rewards, it ends up being an underutilized marketing channel for card issuers and their merchant partners. By partnering with Kard, issuers can increase the conversions on their rewards, increase wallet share, and increase value provided to their merchant partners.
What was the funding process like?
It was exciting but also challenging. We hadn’t intended on raising money when we did, but started networking with any and all potential investors that we were connected to in order to get our name out there and get feedback on the problem we’re solving. Our investors got it. There’s a clear lack of awareness among consumers with respect to credit card rewards and with increasing competition, card issuers need to get smarter about how they’re incentivizing their cardholders. Kard is the missing link.
What are the biggest challenges that you faced while raising capital?
The biggest challenge, by far, was being a non-technical founder. Some investors wouldn’t give me the time of day, one of the reasons why I didn’t approach institutional investment. For months, my primary responsibility was network, pitching, more networking and more pitching. I had to take advantage of the skills I do have and got very good at telling our story in a compelling way, demonstrating our product and selling our team’s capabilities. The other major challenge was making the transition from verbal commitments to actual written checks…it’s harder than you’d think!
What factors about your business led your investors to write the check?
I think it ultimately came down to belief in the problem we’re solving. Kard is building a product that is well set-up for the future of credit card rewards. Consumers are becoming smarter about their rewards and shopping habits, discount shopping is the new norm, and increased competition is requiring card issuers to play “catch-up” and develop new, innovative rewards programs. Our competition is focused on the rewards of the past, but Kard plans to be one step ahead of this market shift and help consumers maximize the rewards of the future.
What are the milestones you plan to achieve in the next six months?
We will launch our beta product, both on web and mobile, and focus on growing our user base to prove product market fit.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Bootstrap until you can get what you need. When I first started working on Kard, I didn’t have any investors or partners but I pulled together what I could for the first 6 months in order to get a prototype built and be able to demo something powerful to investors. If you really need funds, it’s all about working your network and having a passion for what you’re doing. If you’re solving a real problem, and wholeheartedly believe in it, then the money will follow.
Where do you see the company going now over the near term?
We plan on launching in spring, learning from our users, continuing to develop merchant and credit card partnerships, and raising another round of funding to accelerate growth later this year. The next 6 months are going to be very telling towards the success of the business!
Where is your favorite bar in the city for an after work drink?
Joseph Leonard’s in the West Village. Try the magdalena, you won’t be disappointed. Awesome date spot.
