Ted Leonsis on Revolution’s Newest Big Bet

Ted Leonsis has a lot to juggle: among other things, he’s a co-founding partner of the venture firm Revolution Growth; he’s a director on the board of American Express; and he’s vice chairman and co-CEO of Groupon, an interim position.

But when Leonsis thinks he spies a lucrative new opportunity in the world of e-commerce – he’s been immersed in it since selling a shopping catalog startup in 1993 to AOL, where he resigned as vice chair 13 years later — he’s more than willing to make time for it.

Such is the case with Optoro, a five-year-old Lanham, Md.,-based company whose software enables big-box retailers like Best Buy to more easily re-sell inventory that has been returned by customers.

Revolution just led a new, $23.5 million round in Optoro, along with Grotech Ventures, which provided Optoro with $7.5 million in Series A-1 financing in January. According to Leonsis, who has joined Optoro’s board, Revolution chipped in roughly $20 million, with Grotech contributing the rest. Optoro’s first round of funding came through a $1.9 million round in 2011 whose investors included Nigel Morris, co-founder of CapitalOne.

Certainly, Optoro seems to be chasing a big market. According to a 2009 report published by the National Retail Federation, roughly 8% of all retail goods purchased are returned annually. (In 2009, that translated into $185.5 billion dollars.) Fraud makes up about 5% of that total.

Much of that money is lost, with retailers faced with few options other than middlemen who sell the items to “the kind of stores you see selling electronics on Broadway,” as Leonsis describes it. But Optoro’s data analytics and marketing platform is now making it possible for those same retailers to disperse their returned and excess inventory to consumers through a number of online marketplaces, including Amazon, eBay, and Optoro’s own consumer-facing site, Blinq.com.

Optoro owns just one warehouse, and there aren’t plans for another — yet — as most goods it helps to sell are shipped directly from retailers to buyers.

What Revolution is counting on, however, is a big payday in Optoro. Leonsis says the company may hit $30 million in revenue this year, and he suggests that that’s just the beginning.

“There are very few undiscovered big segments that haven’t been transformed by the Web at scale,” Leonsis says. “This is one of them, and these guys are pioneers in the category.”

Optoro is the fifth investment Revolution Growth has made with the $450 million fund it raised 18 months ago. The fund’s other investments include FedBid, an online marketplace for business-to-government e-commerce, and Echo360, which helps universities shift their content online.

Image: Photo of Ted Leonsis courtesy of Revolution Growth.

(Corrections: The original version of this story incorrectly stated that Leonsis is the chairman of Groupon. It also stated that the overall funding for Optoro was $25 million.)