ShopKeep Secures $10 Million in Second Round of Funding – WSJ

Congruity Solutions is extremely excited for the future of our partnership with ShopKeep POS. ShopKeep announced that they have secured $10 million in funding. Here’s the article today from the Wall Street Journal.

By Matthew Lynley

ShopKeep POS, a New York-based startup that builds a point-of-sales app for the iPad, has raised $10 million in its second round of funding.

The comparison to Square is easy to make, given that both plug credit card readers into an iPad. But the differences start to show up as businesses require more capabilities, like keeping close track of employee activity, said ShopKeep POS CEO Jason Richelson.

ShopKeep POS does handle some credit card processing, and takes a percentage off each swipe like other companies. But it also lets merchants use existing merchant accounts with financial institutions like Bank of America BAC +5.66%.

The company now has around 3,000 merchants running ShopKeep POS. There are early signs of larger chains converting their legacy point-of-sales systems to ShopKeep POS, with the service being deployed in newer stores once open, he said.

The company will use its new funding to staff up with additional engineers.

We caught up with Richelson to find out more about the new round and how it’s going to be used. Here’s an edited transcript of the interview:

WSJ: Can you tell us a little bit about ShopKeep?

Jason Richelson: We’re the east coast Square. Well, only kind of joking, Square’s obviously in San Francisco and we actually have a sales force out here. But once you open a store and start scaling up, Square doesn’t have the functionality that a real store needs. A lot of stores might start that way, and a lot of guys graduate to ShopKeep. Square educated the market, that’s great, but we offer more for the more sophisticated businesses as they scale up.

WSJ: What do you mean graduate?

JR: I mean we have, forward pointing, image-line management, multiple tenders, that kind of stuff. We do kitchen purchases –you can place an order to the registers and it’ll print a receipt to the kitchen. We do employee tracking, full time-clock functionality, and some really detailed reporting. If you look at Brooklyn, you know the Greene Grape, I started that business and my first creation was a point-of-sales system that prompted me to start ShopKeep. Basically I know what retailers need to run their shops. Square is doing a good job but they’re coming from both sides, we’re only merchant focused. We’re 110% focused on that.

WSJ: How big is ShopKeep?

JR: We have over 3,000 retail stores across the country using ShopKeep, and we have 37 employees. Our customers are probably minimum $200,000 to $300,000 in sales. They are doing 50, 100, 500 swipes a day and they’re real retailers.

WSJ: Does ShopKeep do credit card processing too?

JR: We’re fully integrated — you swipe a credit card through ShopKeep . You can use your credit card merchant account with ShopKeep too. Some of these retailers have an amazing deal with credit card processing with Bank of America or Chase, and they want to keep doing that, so we can route the transactions to their merchant account. When you sign up, you get asked if you want to use us as a processor, and the average volume determines the swipe fee. It’s gonna be really clear what you’re paying. If your average ticket is high it’s gonna be around 2%, if it’s low it’ll be 3-5%. If you want to use PayPal with ShopKeep you can get that same rate. When they come to us, if they get a merchant account with us, there’s no cancellation fee and it’s simple pricing.

WSJ: How are you attracting bigger retailers?

JR: It’s very hard to convince any retailer that already has a computer-based point of sales system. We’re doing a great job signing up all the new stores out there. What’s happening is these stores with multiple locations, when they open the next location they’re switching to ShopKeep. It’s still new, but it’s getting there, and we’re gonna do some things next year to help transition some of those larger retailers onto ShopKeep. Our focus is on enterprise, but it’s the small single-location retailer and new multi-location store service now.

WSJ: So that’s what the funding is for?

JR: The funding is for engineering. We just hired a director of talent acquisition to find and bring in new engineers. ShopKeep is an iOS-based application with a Rails back-end, we do a lot of JavaScript and we do payments. Those are all the things that really excite engineers. When you think of an engineer joining Etsy, an Etsy is just an online app. With ShopKeep you can touch iOS, you can touch rails, you can get into hardware interfaces, it’s an exciting place to work.

WSJ: What’s your personal background?

JR: Before the Greene Grape, I worked at a trading firm on a market trading desk for three years. Before that I was at an Internet startup called Internet Cash, it was a stored value shopping cart for shopping on the Internet. An alternative payment method. Then the Greene Grape. I have a lot of experience in retail, and I was at PriceWaterhouse before the Internet crash. I have a background that doesn’t work well for a lot of people so that’s why I started ShopKeep and Greene Grape.

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