A Natural History of the Scentsa: Fragrances Publisher Gets Huntington Capital Financing to Expand Technology Platform
Just as Greg was reporting the $5 million in financing that San Diego’s Huntington Capital arranged for custom publisher RPI in Tukwila, WA, the firm was providing similar financing for Crescent House Publishing of Carlsbad, CA.
Both deals came out of Huntington Capital Fund II, the $78 million fund the boutique lender and private equity investor formed in late 2008. The firm has provided funding for 15 companies out of the fund so far, according to Huntington managing partner Morgan Miller.
Huntington usually avoids financing deals with risky technology ventures, instead preferring to provide capital to mature companies that need growth capital to expand their businesses. In the case of Crescent House Publishing, the 18-year-old Carlsbad publisher has spent the past five years developing Scentsa, a technology software and services platform focused on marketing fragrances and perfumes. After securing some key customers, the company is using the capital to expand the deployment of its interactive touch-screen displays, according to Huntington. The firm did not specify the amount of the financing, but Miller says it’s less than $5 million.
The Crescent House Publishing story reminds me of a similar metamorphosis at San Diego’s Mitchell International, a company founded in 1946 to sell automotive parts pricing catalogs. Under a transformation that began 50 years later, Mitchell developed Web-based payments processing system and other software for automotive repair shops. Today the company’s software and services supports millions of online transactions each month among insurance claims administrators, damage appraisers, and auto repair specialists.
Jan Moran, a fragrance expert and consultant in Carlsbad, founded Crescent House Publishing in 1992. She told the perfume blog “Now Smell This” in 2005 that she formed her own publishing house because she was unable to find a publisher willing to print “Fabulous Fragrances,” a book she published in 1994 as her comprehensive “ode” to perfumes for shoppers and retailers. (Her retail customers included department stores like Nordstrom, Nieman Marcus, and Saks Fifth Avenue, among others.)
Moran followed up with a second volume, “Fabulous Fragrances II,” which she published in 2000. By 2005, however, Moran saw that the unrealized value of her labor was really the knowledge she had amassed about fragrances—and she set out to transform the catalog of information she had pulled together into an online database about fragrances and perfumes.
That strategy wasn’t exactly right either, but she was on the right scent. Over the next year she began developing Scentsa, a software and services platform that provides retailers with an interactive touch screen. Shoppers and sales assistants can use the wall-mounted screen to call up a potpourri of information about perfumes and related products.
“We’ve worked very hard to make it very easy to use,” Moran says. “It takes just a few seconds to know how to use it, and to find relevant information.”
Crescent House introduced its touch screen system in 2008 under an agreement with Sephora, the French chain of cosmetics stores, deploying 275 units in less than three months, according to Steven Fish, Crescent House’s co-CEO. Under their agreement Sephora has rights to Crescent House’s proprietary Scentsa and ScentsaBeauty software in the United States, Canada, and Puerto Rico. Fish says the technology also is available in Sephora in JCPenney, certain DFS Galleria duty-free shops, and Barnes & Noble College Bookstores.
Crescent was willing to sign an exclusive deal with Sephora, Fish says, because “Sephora is a best-of-breed for what they do.” As a technology platform, the touch-screen system and database could be used by other types of retailers to sell other products, such as wine and cheese, according to Fish and Moran.
They say the technology is ideal for retailers who stock a diverse assortment of products, in which expert knowledge can tip the balance in consumers’ purchase decisions, and in which consumers’ desire for knowledge also enhances the buying decision.
“We provide all the hardware, installation, software, updates, and we only charge a monthly fee,” Fish says. “It’s turned out to be very successful for us.”