Buysafe – Profile
HQ: Arlington, VA
Founded: November 2003
Management: President & CEO is Jeffrey Grass who previously co-founded PayMyBills.com which was sold for $67M to Intuit’s PayTrust unit. He also has a background in the bonding business.
Investors: In March 2005, the company raised $13.25M from Grotech Capital Group and Core Capital Partners as well as first-round funders Hartford Ventures and Thomas Rutherfoord.
Business Model: Buysafe is a bonding service for eBay users. It verifies merchants’ identities and confirms they are financially stable. In the first 16 months of business, Buysafe sealed over $1.2B worth of transactions and more than half a million bonds. Sellers pay 1% of their final sales price for each bonded item. Sellers gain the Buysafe logo, which should help them to sell more – particularly more expensive items.
Competitors: The company competes for mindshare, although not head-on, with Squaretrade.
Dirt: The eBay economy is amazing for the number of companies that it has given rise to. So long as it continues to be run well, Buysafe is sure to grow quickly. One of eBay’s biggest issues is fraud. In fact, it has over 800 people in its ‘trust and safety’ unit. So both eBay and eBay sellers have an interest in making Buysafe a success. All this said, we would fear that at some point more competitors will join the game and then what? Bonding becomes a commodity and it’s hard to compete on anything other than price.