VendScreen, online vending machine startup, lands $17.8 million investment [The Oregonian, Portland, Ore. :: ]
(Oregonian (Portland, OR) Via Acquire Media NewsEdge) Jan. 22--Portland startup VendScreen, coming off management turmoil and business uncertainty, has landed $17.8 million in fresh backing for its Internet-enabled vending machine software.
It's a big investment by the standards of Oregon entrepreneurship, and new management installed last year says VendScreen will use the funding to begin scaling up the company while seeking a bigger market for its technology. The company has now raised close to $35 million altogether.
VendScreen, founded in 2011, attaches a smartphone-sized screen to conventional vending machines to improve sales and to market the products in the machines. The device tracks purchases and inventory, enables credit-card transactions and provides product details, such as federally mandated nutritional information.
One of the first companies to emerge from Wieden+Kennedy's Portland Incubator Experiment, VendScreen has endured a rocky few years despite considerable excitement over its technology.
VendScreen made headlines two years ago by declaring that it had secured a $12 million investment for its technology. Only a portion of that funding materialized, and VendScreen said it later took a "down round" -- accepting a decline in the company's valuation, and diluting prior investors' stake, to raise additional funds.
Last year, a new investor known as the 3x5 Special Opportunity Fund pushed out co-founder Paresh Patel in a dispute over the company's direction. Today's investment comes from 3x5 and from another early backer, Merrickhanna Ventures, which includes Portland tech investor Nitin Khanna, who serves on VendScreen's board.
(Khanna was sued this month over accusations of a sexual assault in 2012; Khanna has denied the accusations, and VendScreen said the controversy is not affecting its business.)
The company is now rebuilding under new president John Archer, a former Intel and Radisys engineering executive who joined VendScreen last August. He said the company has overhauled its software and hopes to appeal to a vending machine industry that is in danger of going stale as fresh technologies and changing shopping habits overcome the convenience of candy bar and soda dispensers in the workplace.
"The industry is constantly looking at relevance," Archer said. "If you look at the last five years or so, it's generally been declining."
VendScreen's technology opens new opportunities, he said, by enabling credit card purchasing and by providing real-time inventory information that helps vending machine operators improve efficiency.
VendScreen was spinning its wheels in 2012 and in much of 2013, Archer said, as it worked through software problems, funding issues and the management changes. Now, he said, a number of big customers have expressed strong interest in buying thousands of machines apiece. Several others, he said, are preparing to buy between 500 and 1,000.
"It's been two years of little traction," Archer said. "We've got the company positioned now."
-- Mike Rogoway; twitter: @rogoway; 503-294-7699
(c)2014 The Oregonian (Portland, Ore.)
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