Monday, March 17, 2008

Mall developer Karp, partners put $25M in web startup Retail Convergence

By Christopher Calnan

Two well-known Boston real estate developers, along with a former chief marketing officer of Reebok, are investing in a planned $25 million financing of a new online retail company whose name harks back to the beginnings of SmartBargains.com.

The startup, Boston-based Retail Convergence Inc., has closed on a $22.6 million Series A round of private equity funding -- a huge sum of capital compared with the amounts being taken by other online retailers nationally.

Dennis Baldwin, Reebok's CMO until 2006, and Stephen Karp and Steven Fischman, founders of Newton shopping center developer New England Development, are listed as directors of the online retailer, according to documents filed with the U.S. Securities and Exchange Commission.

Retail Convergence was the initial name of Boston's SmartBargains Inc., an online retailer founded in 2000. SmartBargains CEO Benjamin Fischman, who is also listed on the SEC filing as an executive officer of Retail Convergence, is Steven Fischman's 36-year-old son.

Benjamin Fischman declined to provide details about the funding except to say that it's to finance a "new e-commerce strategy."

The funding being sought by the company nearly quadruples the median round of financing, at $5.8 million, invested in VC-backed online retail companies in the United States during 2007, according to Dow Jones VentureSource.

Both Retail Convergence and SmartBargains share the same address, 10 Milk St., according to state incorporation documents. The SEC filing also indicates that Retail Convergence has attracted 15 investors contributing $22.6 million of a $25 million offering of convertible preferred stock.

Baldwin's Breakaway Partners I LLC and General Catalyst Group, a Cambridge-based venture capital firm that co-founded SmartBargains with managing director David Fialkow, are listed as two of Retail Convergence's "beneficial owners," the filing shows.