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• Tradeblock on Thursday announced an $8.9 million seed investment round.
• The company, a trading platform for sneakers, previously raised $4.6 million. 
• The investment solidifies Tradeblock as one of the most promising sneaker startups.

The sneaker-trading app Tradeblock has raised an $8.9 million seed round, with investments coming from CourtsideVC, Trinity, and Concrete Rose. The investment solidifies it as one of the most promising startups in the booming secondary market for collectible kicks.

Unlike other startups in the market like StockX, Goat, Another Lane, and SoleSavy, Tradeblock customers trade rather than sell sneakers. The app launched in August 2020 and has grown steadily. It now has more than 1 million shoes on the site.

The company expects to raise another $4.5 million before closing the seed round this fall. 

Tradeblock is the brainchild of cofounders and childhood friends Mbiyimoh "Beems" Ghogomu, Tony Malveaux, and Darren Smith. 

The idea goes back more than a decade to when Malveaux and Smith worked at a Foot Locker, and Ghogomu worked at a Finish Line.

"We had traded sneakers off of our feet in junior high and high school," said Ghogomu, who serves as CEO. "The concept wasn't that crazy."

By 2019, after the emergence of StockX and Goat, the cofounders decided the market was ready for a trading platform. Tradeblock customers might swap a pair of Dunks and a pair of Jordans for a pair of Yeezys.

Ghogomu said trading is a perfect fit for today's sneaker economy, considering that most high-demand sneakers get raffled. Given the long odds of ever winning (and the persistence of bots that jump digital lines), a lot of collectors enter every raffle, even for shoes they may not have much interest in keeping.

"All of us have, to a certain extent, been conditioned to try for 90% of the raffles on the SNKRS app, even for the shoes where it's like, 'Honestly, that's a crazy-looking shoe,'" Ghogomu said. 

With raffles, it's not uncommon for sneaker collectors to win a shoe they'd rather trade or sell. Those are prime Tradeblock customers. 

Tradeblock gets a flat $40 fee on each trade, including a $25 service fee and $15 for shipping. There's an additional fee if there's more than one pair of shoes in the trade. 

Trading is part of the appeal, no different than sports fans who endlessly debate swapping star players.

"The premise is very conducive to social media. It lends itself to people posting about trades," said Dylan Dittrich, the head of research at Altan Insights and author of the book "Sneakonomic Growth," which tracks the growth of sneakers as an asset class. 

Ghogomu, Malveaux, and Smith started the business by manually making trades for sneaker collectors. As word got out, more people came forward. Ghogomu said most messages ending by asking, "What can I get for these?"

"That's when I told Darren and Tony, 'We have something,'" he said.

Ghogomu said the company won't be ready for a Series A round until late next year, but he didn't want to wait to raise cash given the uncertain economy. The company needs money to fund its growth. 

"We were looking at the macroeconomic climate and basically saying, 'Hey, funding markets are about to get really tough,'" he said. 

Ghogomu said the $8.9 million investment round gives the company about 24 months of financial runway, enough to weather any economic turbulence. 

Trinity typically invests in Series A rounds, but came around after hearing Ghogomu's pitch. 

"Trinity actually started the conversation by saying, 'There's no way we're gonna invest in you guys. This is not our jazz,'" he said. 

Ghogomu said Trinity liked that Tradeblock focuses on collectors, not sellers. It also liked the size of the market and the room to expand the business.

Tradeblock will use the investment round to improve operations and logistics. The company just moved from a 5,000-square-foot warehouse to a 20,000-square-foot warehouse. It's also investing in data science to improve the user experience. It wants to add services like suggesting trades. 

Tradeblock previously raised $4.6 million. Existing investors like the company's focus on collectors and constant effort to add features. 

"Their talent, traction, and timing into a space with few established competitors made it a really easy decision to invest," said the angel investor Stephen Green, who invested in an earlier round. "Mbiyimoh sets a great tenor as a driven leader who is always curious about his customers and market."

Among the possible new features: expanding beyond sneakers. 

"There's a reason the name Tradeblock does not have anything sneaker-related in it," Ghogomu said. "We know sneakers better than probably any other category. But at the end of the day, this has always been about how do we build the world's first true barter-based marketplace."

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