Boston VCs Pour Cash into Cash4Gold’s Superbowl Spot
If you were watching the Superbowl yesterday, you may have seen the tongue-in-cheek ad in which down-on-their luck celebrities Ed McMahon and MC Hammer hawked Cash4Gold, a Pompano Beach, FL-based metal refinery that sends customers checks for mailing in their unwanted gold, silver, or platinum jewelry. An e-mail about the ad circulated this weekend by a partner at General Catalyst provides the first public acknowledgement that GC is an investor in Cash4Gold, confirming—at least in part—a report earlier this month from Dan Primack at Private Equity Hub.
Primack reported in the January 6 edition of PE Hub’s daily e-mail newsletter, PE Week Wire, that GC and Lexington, MA-based Highland Capital Partners had just put more than $40 million into the company. Primack didn’t reveal his sources, and neither GC nor Highland would confirm or comment on their involvement.
But in a general e-mail this weekend, Bilal Zuberi at General Catalyst wrote: “If you are watching the Superbowl, look out for ads in the pregame and 3q for our portfolio company ‘Cash4Gold’ :) …And pull out your baggy pants in anticipation of MC Hammer on the screen.” Below, I’ve embedded the YouTube version of the ad—which earned an “A” from Time Magazine in its round up of the best and worst Superbowl ads of 2009.
When I contacted Zuberi today, he said he wouldn’t call his note an official confirmation that General Catalyst was in on the Cash4Gold deal. “It was kind of a joke e-mail,” he said. “It’s one of those investments where everybody talks about it. I don’t know anything about that area [of GC's business]. It was just a note to my friends saying you’ve got to check it out.”
I’ve got a call in to Michelle Daubar, GC’s communications director, requesting the firm’s official word about the investment. I’ve also requested comment from Dan Nova at Highland, whom Primack identified as that firm’s lead partner on the Cash4Gold deal.
Offering consumers cash for their precious-metal objects, especially at a time when gold prices are relatively high, may be a canny way to make money during a downturn. But one obvious question is whether partners at GC and Highland were aware of, and/or signed off on, Cash4Gold’s decision to put its own money into Superbowl advertising. According to a story on ESPN.com last week, NBC charged advertisers $3 million for each 30-second spot during the big game. That’s almost twice as much as companies paid back in 1998-1999, when so many dot-com companies were accused of profligacy for buying Superbowl spots.
I’ll let you know if I hear back from anyone.
Update, February 3, 2009: VentureBeat has picked up the Cash4Gold story, reporting on consumer complaints about the company, which apparently center on payment delays and “misplaced” packages that result in insurance payments below the value of the enclosed jewelry.
Update, February 6, 2009: The Economist‘s Free Xchange blog reported this week that Cash4Gold has attempted to buy off a blogger who was critical of the company. If you search for “Cash4Gold” on Google, this blogger’s post claiming that the company pays customers for mailed-in gold at rates far below the market price appears at or near the top of the results. According to The Economist, he got a letter offering him cash to take down the post or “de-optimize” it for the search engines.