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StyleFeeder Inc. has raised an inside round of $500,000 in convertible debt, its executives and investors confirm.
The Cambridge-based company provides an online shopping recommendation website aimed at women ages 18 to 35. Investors Highland Capital Partners and Boston-based Schooner Capital LLC returned to participate in the round, which adds to the company’s total equity funding of about $3.5 million, said Highland principal Gaurav Tewari.
The debt round is intended to provide a working capital cushion for StyleFeeder, which reached profitability last month, said CEO and founder Philip Jacob.
The company, with six full-time employees serving 2.5 million monthly unique visitors with 14 million product listings, is a model lean-operating web company, said Tewari. “It’s kind of the epitome of what many Web 2.0 companies set out to be,” he said.
StyleFeeder uses a machine learning algorithm to identify patterns in what customers like, based on what they’ve bought, and ratings of one to five stars that they’ve assigned to products on the site. One of its strengths is the ability to learn shoppers’ preferences in real time.
It takes Apple Inc.’s (Nasdaq: AAPL) iTunes two days to come up with recommendations, Jacob said.
“If you’re Apple and you have 10 trillion users on day one, that’s fine,” he said. “For a startup like StyleFeeder where you’re starting with nothing it’s important to show right away that you can adapt with (customers).”
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