The Pitch: "Point-of-sale software can be expensive -- some popular applications cost close to $1,000. ShopKeep is an affordable Web-based point-of-sale system designed for small businesses. Because our software runs online, retailers can track sales and manage inventory from anywhere. What's different about our software is that it also runs locally on the cash register, so even if a store's Internet connection goes down, the business can still ring up customers. ShopKeep works on both PCs and Macs, and it integrates with QuickBooks and e-commerce software. We're raising money to hire a sales team and launch an online advertising campaign."
Founder: Jason Richelson
Location: New York City
Product Launch: April 2010
2010 Projected Revenue: $20,000
2011 Projected Revenue: $300,000
Price: $49 to $129 per month per register
Number of Customers: 60
Funding Sought: $500,000 to $1 million
Background: Richelson came up with the idea for ShopKeep after co-founding The Greene Grape, a wine and grocery chain with three locations in New York City.
Hire a Marketing Expert
This pitch makes me a little nervous. It sounds like Richelson has sold this software to some customers door to door, but there's no indication that he knows how to acquire customers efficiently. Before ShopKeep tries to raise money, it should hire someone with strong Web marketing experience who can help the company lower its cost of acquiring new customers. This isn't the sort of business that's going to provide big returns for investors -- point-of-sale software companies typically sell at two to five times revenue -- so ShopKeep needs to get everything right.
Partner, Dace Ventures
Prove It Can Scale
ShopKeep is in a fairly crowded space, and selling to small businesses is challenging. It tends to require more capital to reach this market: You have to have a lot of feet on the street. But using commissioned salespeople means giving up a lot of margin. I don't think ShopKeep should look for venture funding. Instead, it should raise seed funding from friends, family, and angels and focus on gaining adoption in a specific geography or vertical market, such as convenience stores. If ShopKeep can show evidence of scale, it will be more attractive to investors.
Venture partner, Canaan Partners
May Be a Lifestyle Business
ShopKeep is a very nice application that clearly grew out of a retailer's frustration with traditional point-of-sale systems. This has the potential to be a lifestyle business with a recurring revenue stream, but it is not likely to be funded with outside equity capital. At least half a dozen other companies offer virtually identical solutions at even lower prices, and those firms have been unable to ramp up sales significantly. Paying a sales force to sell a low-priced product like this is unlikely to work. Richelson would be better off trying to find a scalable, self-service way to market and sell online.
David S. Rose
Chairman, New York Angels
New York City