A Raleigh startup whose technology is aimed at showing travelers how to optimize their frequent-flyer miles and hotel and credit card reward points has raised $350,000 in seed funding.
The company is based on the premise that loyalty programs offer valuable rewards, but figuring out how best to use them — including combining rewards from different sources – can be complicated. RewardStock’s algorithms automatically do the calculating for you.
“I think it’s a really neat idea,” said venture capitalist David Gardner of Cofounders. “The problem it solves is that billions of dollars are lost every year in points that just rotate off because they never get used. People don’t know how to use them.”
CEO Jonathan Hayes, a former vice president in Citigroup’s investment banking division, was inspired to create the business after he and his then-fiancee devoted buckets of time to devising a strategy that enabled them to pay for the travel and hotel for their honeymoon in the Maldives, an island country in the Indian Ocean, entirely with rewards.
“It was an incredible experience that I wouldn’t have had if I had to pay cash for it,” Hayes said.
When the RewardStock website is up and running, consumers can use it at no cost to analyze the reward points and frequent-flyer miles they have and find the best way to use those rewards for the trip they have in mind. If they don’t have enough points for that trip, RewardStock will outline strategies for obtaining additional points.
That can include buying points – which is permitted with many reward plans – as well as signing up for new credit cards that offer bonuses if you spend so much on the cards in the first few months.
The latter is how RewardStock plans to make money – by receiving commissions from credit card companies whenever a consumer signs up for a card through a link on its website.
“From a user perspective, it’s all free,” Hayes said. “Almost everybody travels. You can see the benefits for everyone.”
But it can be particularly advantageous for those planning a honeymoon, he added, because they’re planning months in advance and will be spending the money required to obtain credit card signup bonuses anyway.
People who register at the company’s website, rewardstock.com, will receive email alerts when the company launches its beta version and when the site officially debuts.
RewardStock has two employees today and plans to hire two more in the near future as it gears up for its launch.