ShopKeep makes point-of-sale software for small businesses. Can it raise $1 million from investors?
Pour Vous Jason Richelson uses ShopKeep to manage The Greene Grape's loyalty program. After customers spend $400 on wine, they get a $20 coupon.
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 Employees: Two 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.
The Experts Weigh In
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.
Jon Chait Partner, Dace Ventures Waltham, Massachusetts
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.
Dan Ciporin Venture partner, Canaan Partners Westport, Connecticut
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