Friday, December 10, 2010

Bubble hits Boston: Stealthy Krush raises at $6M+ pre

By Galen Moore

The bubble looked like it was bypassing Boston. It’s a wave of enthusiasm sweeping New York and San Francisco investors off their feet for mobile and web startups. In Boston? Not so much. It seems clear that investors here don’t get consumer plays, so why would a brilliant entrepreneur stay?

This week, that changes. The one-year-old Boston-area startup Krush Inc. has, well, crushed the skeptics with a Series A round of financing raised at a pre-money valuation over $6 million. That’s a handsome price for a company that hasn’t released a product yet and is being very stealthy about what they are doing. The fundraising started this year at the Open Angel Forum startup pitch event in Cambridge and quickly bid up to $2.5 million pre-money, then $4 million, then $6 million, said one angel investor who looked at the company.

Co-founder Gina Ashe, who was a co-founder at Sermo Inc., said the company’s Boston-area backers – part of a syndicate of angels and institutionals that stretches west to California, south to Tennessee and across oceans – are all angels. Krush is bucking the notion that Boston can’t breed good consumer startups, but the company’s experience confirms doubts about Boston VCs’ willingness to write them checks. Ashe praised Boston angels but said venture firms here didn’t show interest. “The fact that we had to go outside of Boston was really sad to me,” she said.

Krush’s lack of traction with Boston institutionals wasn’t for having unknown founders. Ashe raised $40 million at Sermo. Her co-founders Alexis Kopikis and Alan Osman are winding down Propel Consulting to start full-time on Krush. Propel does contract product development consulting for venture-backed and public software companies.

Ashe wouldn’t specify the size of the investment, but said it was “a lovely, sizeable A round.”

So, what does Krush do? Hard to say. The company is currently in a private beta with a few thousand users internationally. A website landing page reads, “Have a talent for spotting the next cool thing? Prove it. Start a krush.”

“It’s a really interesting fusion of social networking and gaming and commerce and predictive markets,” Ashe said. “It’s just got a whole new scale and we’re learning so much every day.”

Ashe said the company aims to provide a digital experience geared to shoppers who have grown up using the Internet. “They don’t respond to traditional marketing and advertising. it’s not part of their culture. They make decisions in such an ultra-socially networked, digitally wired kind of way that the industry just isn’t there yet,” Ashe said. “The potential to just understand how they think and act and give them a playground to do that; you start to think of how big this could get and how impactful could it be.”
 
Ashe said she’d offer more details in Q1, 2011.