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Print Edition StoriesMonday, November 2, 2009
CashStar snags $5M, Home Depot retailing; plans new engineering hires
By Galen Moore
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CashStar Inc. has landed $5 million from existing investors and added another major retailer, the company reports.
The Home Depot Inc. (NYSE: HD) is the latest buyer of the Portland, Maine-based startup’s online gift card technology, according to CEO and co-founder David Stone. The company also raised $5 million in an inside equity round from its existing investors. The new financing brings CashStar’s total venture investment to $8 million, not including nearly $1 million it received through a matching grant program run by the state of Maine.
CashStar provides a software-as-a-service (SaaS) product that allows retailers to sell digital gift cards on their website and in stores, and then track how the cards are used. Revenue comes from a percentage of the cards’ face values, as well as installation and service fees. The company is also adding fee-based services like special promotions.
Currently, CashStar employs 24. Stone said plans call for that number to double by the end of 2010.
He said the company plans to hire SaaS sales executives on both coasts, who can bring in more national retail and restaurant brands. CVS Caremark Corp., Travelocity.com LP and Uno Restaurant Holdings Corp. are among CashStar’s 26 pre-existing customers.
“As much as we are a pre-paid gift card product we see ourselves as a very important strategic sale to the VPs of e-commerce to create a much more engaging online experience for their customers,” Stone said.
He said CashStar will also hire engineers to add new product components. Another engineering focus is security. CashStar does not require a mailing address in order to sell a customer a credit card, which makes the company a target for credit-card fraud and other kinds of digital-goods-related fraud, Stone said.
Customer service will also be a hiring priority, he said. The company plans to expand its customer service offering to 12 hours a day.
Co-founded by Stone and chairman Steven Boal, CashStar launched in Portland in March 2009, after incubating with California-based digital coupons provider Coupons Inc. since January, 2008.
CashStar’s only professional investor is San Francisco-based Passport Capital LLC. The company’s other backers are private, angel investors, Stone said. He declined to disclose the company’s revenues or profitability.
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