A pair of Twin Cities entrepreneurs are vying to protect buyers and sellers in the online marketplace.
That’s what TradeOut does. It works like a virtual contract that verifies users while also maintaining a paper trail of a transaction. The St. Paul-based startup recently finalized a partnership with payment-processing platform Stripe and expects to launch a minimum viable product — basically, a simple version of the product that's released to be tested and refined through user feedback — any day now as legal processes are finalized.
Online scams hit close to home to the company’s two founders. CEO Iyanu Olukoga was trying to help his mom sell her Macbook Pro and a supposed buyer who claimed to be from California offered some money, asking Olukoga to overnight the product. The would-be buyer said they sent the money, and a notification just said it was waiting for a tracking receipt.
Olukoga was new to using PayPal at the time, so he wasn’t sure what kind of scams to look out for. Before dropping off the Macbook, his mom asked one more time: “Iyanu, do you think this transaction is legitimate?” He called PayPal to double check. They told him it was a likely scam.
Chief Technology Officer Gafar Amuda was trying to sell Playstation consoles during the pandemic and found that buyers were always wary of a scam, sometimes bringing entire television sets to Amuda’s home to test the Playstation.
“We decided to see how big of an issue this was,” Olukoga said. The duo found that scams were rampant on platforms like Facebook Marketplace and Craigslist. Sometimes a person would get scammed, post about it online, and another would say they can help get the victim’s money back. That would also be a scam.
“It's just a bad cycle that's being perpetuated in these marketplaces,” Olukoga said.
TradeOut is a simple process, he said. A buyer and seller agree on a price and share product details, like its condition, which then goes into a virtual contract. They meet at the exchange point, make the trade and click a button on the platform. That starts a 24-hour countdown where the buyer can dispute the purchase if there are issues.
The product is currently its own browser-based platform, but Olukoga said it could someday work as an extension for existing online marketplaces. Users are verified with a photo and drivers license through Stripe, which ensures the transaction is between people and not bots.
The virtual contract offers paths to recourse for scams, maintaining a paper trail to dispute purchases with a bank or in small claims court.
The duo attended Twin Cities Startup Week last year just to check it out. They were surprised by the outcome after they won second place in the Shark Tank portion of the event. A couple of grants from the University of St. Thomas helped to bring them afloat and they’ve drawn recent interest from various investors.
They just finished Gener8tor’s gBeta accelerator and have gone through a couple incubator programs. Now fundraising is top of mind.
“We understand that when doing transactions with other people, it can be kind of a scary situation to put yourself in,” Olukoga said. “It's a problem that we are trying to help fix.”
