VentureBeat

If you’re anything like the average Silicon Valley entrepreneur, right now you’ve got an iPhone in your pocket and a pile of old Blackberries in a drawer somewhere. But hopefully, with the help of recycling and resale companies like Flipswap, we’ll no longer keep old phones hanging around or worse, throw them in the trash.

Flipswap just raised $14 million for its business plan of letting you trade in or recycle your old phone as you’re buying a new one. The startup says it has taken over 700,000 handsets back to date, and partnered with several larger companies, including Amazon and Newegg.

Its web site tries to make simplify the trade-in process for consumers. You can choose to either take store credit at a nearby location (sadly, the closest to me is 60 miles away) or trade online. The price for a trade-in is prominently displayed although, as you might imagine, quite a few older phones are worth little to nothing.

Because mobile phone use is still growing at a torrid pace worldwide, Flipswap can turn a decent buck from the model. And that’s why it also has plenty of competition. ReCellular, which just picked up a $15 million investment, also concentrates on mobile phones, and looks like the larger of the two companies. Accepting a wider array of electronics are TechForward, which is raising a round, Turtle Wings and Gazelle, whose parent company Second Rotation just scored $6 million.

The investors backing Flipswap are NGEN Partners and RRE Ventures. The company is based in Los Angeles, Calif.

TechForward, one of several companies that sees opportunity in the market for reused consumer electronics, believes its guaranteed buyback plans are just the thing for people always lusting after the latest in high tech consumer electronics.

Like fellow startups Flipswap, Turtle Wings and Second Rotation, TechForward is touting the concept of “Ownership 2.0″ — the idea that you should be able to donate, sell or trade-in a gadget you no longer want. Unlike its rivals, however, the Los Angeles, Calif.-based firm will lock in a future trade-in value for your device at the point of purchase. The firm uses in house research and comparison tools, in addition to information from primary and secondary markets, to determine the value of the gadgets.

A common complaint heard about companies like this is that the customer often gets a lot less for his device than he could’ve had he sold it through a secondary market like eBay or craigslist. Not true, say Jade Van Doren and Marc Lebovitz, TechForward’s co-founders, who argue that comparing their service to eBay is unfair since only about 1 percent of users actually sell goods. Moreover, only Power Sellers, the highest rated sellers, are able to sell their used products at competitive prices, they say. The comparison also discounts the time and fees associated with using secondary markets.

Under a typical scenario, a customer will pay a one-time service fee to purchase a buyback plan, which gives him the option to return the device anytime during the next two years. Returning it earlier or in mint condition will earn a higher amount, paid out either as a check or gift card depending on where the plan was purchased, though the customer can also choose to keep the device. TechForward will then resell or recycle your device, following the highest environmental standards.

Despite what many consider a similar business model, Van Doren and Lebovitz believe their company, unlike other startups that provide extended warranties or trade-in agreements, has carved out a unique market niche with its buyback plan platform. They see themselves as more of a lifestyle company — one that, like subscription service firms Netflix and BabyPlays, embraces the “ownership cycle” model.

It remains to be seen to what extent this concept catches on. Many are unwilling to accept a sometimes steep cut in the value of their device, even if that means they’ll be guaranteed the money. On top of having to pay a one-time, unrefundable service fee, even the most ardent tech fans may think twice before committing to such a program. Given the recent proliferation of other reused electronics startups, however, it’s clear this concept is gaining currency alongside traditional warranty options.

Now that it has gotten its name out there, TechForward’s next objective is to break into national retail chains, particularly consumer electronics retailers like Best Buy or Circuit City. It just announced a new partnership with W3 Solutions, a major extended service plan provider, with which it will offer buyback plans bundled with extended warranties — allowing it to pursue a two-part distribution strategy.

When I asked Van Doren and Lebovitz whether they planned on eventually accepting a greater variety of consumer goods, they told me they would stay focused on consumer electronics for now though they remain opened to new opportunities. TechForward’s goal over the coming year is to ensure its buyback program is offered everywhere consumer electronics are sold and to expand its operations throughout North America and Europe.

The company’s investors include First Round Capital and New Enterprise Associates, with whose help it has raised a first round of funding. It plans on raising a second round beginning in the fall or winter of this year.