PointWorthy allows people to donate the loyalty points they amass from banks, airlines, hotels and other merchants to nonprofits in the form of cash.
Derechin said the firm is in talks with three of the nation’s top five banks and several hospitality companies, though he did not have permission to disclose their names.
Why would the companies agree to this? Derechin explains that the cash value of loyalty points sits on a merchant’s balance sheet as a liability. The lower that liability — i.e., the more of those loyalty points that get used — the lower their corporate risk.
“We have deals with all of the different loyalty plans in order for them to buy back the points,” Derechin said. “We take back a liability, sell it to them and we’re able to take that cash and direct it to the charities.”
In the future, however, that money could also be used by customers for other purchases, Derechin said.
PointWorthy was one of nine companies that presented Thursday night as graduates of Acceleprise, the District-based accelerator that provides mentorship and investment capital to start-ups that sell to enterprises.
The business is a departure in many ways from Derechin’s previous company, JackBe, which was focused on using data visualization to improve business performance. Derechin stepped down as CEO there about nine months ago, but remained on the board.
“I’m an early-stage guy. I’m not the type of guy who runs a company forever. It’s two very different mentalities,” he said.
This time around, Derechin wanted to start a venture with a social impact.
“I have kids who are 13, 16 and 18, and being an entrepreneur, you kind of are now focused on creating a business that isn’t only a business that allows you to do well, but also one that gives back to the community,” he said.
In addition to Derechin and co-founder Mario Margolis, PointWorthy employs a small team of developers in the United States and India. The company aims to raise $750,000 to build out its business operations in anticipation of its launch early next year.