San Diego’s EcoATM Raises $17M As It Builds Recycling Cash Machine
San Diego’s EcoATM is ringing up $17 million in a Series B round of venture funding today to expand the operation of its automated kiosks, which recycle cell phones and other handheld electronic devices and immediately dispense cash or gift cards.
After deploying several generations of its kiosks in shopping malls, retail stores, and companies throughout San Diego and a few other places, the company has largely proved its business model and is ready to expand throughout California and beyond, CEO Tom Tullie says. As co-founder Mark Bowles wrote a few years ago, EcoATM began in 2008 with the idea of rewarding consumers to recycle their mobile phones by making it easy for them to get a “trade up” discount coupon, cash, gift card, or to make a charitable donation.
Each kiosk uses machine vision, electronic diagnostics, and artificial intelligence to identify and evaluate each device being recycled. The machine checks the spot prices in worldwide secondary markets for electronic devices to determine how much cash or store credit to offer for each trade-in. EcoATM collects the devices and sells them to resellers or recyclers, but Tullie declined to say how much of a cut the company gets on each device sale.
The company estimates the global annual market in recycled cell phones at about $5 billion. Of course, consumers also can sell their mobile phones and devices online or take them to electronic recyclers, but many find EcoATM’s kiosks convenient and appealing.
“I was actually looking to raise about $12 million, and got talked into raising more,” Tullie says. “The speed at which we’ve been able to build the business and get the technology to this stage surprises even me.”
Singapore billionaire Koh Boon Hwee is the new big lead investor, according to Tullie, who would not say how much Koh invested. Koh is a former director of manufacturing and business development for Hewlett-Packard in Asia, and later became chairman of the Singapore Telecom Group and chairman of Singapore Airlines.
PI Holdings, Moore Venture Partners, and AKS Capital also joined in the new round with existing investors Claremont Creek Ventures, Coinstar, and Tao Venture Capital Partners.
EcoATM says it also was awarded a Small Business Innovation Research grant for as much as $1 million from the National Science Foundation. The company received a $180,000 grant last year to fund development of advanced technologies used in the network of EcoATM kiosks.
“We had multiple people chasing the deal,” says Randy Hawks, managing director of Oakland, CA-based Claremont Creek Ventures, who joined the board when EcoATM raised its previous $14.4 million round in early 2011. “We had more people wanting to participate than we had room for them.”
The new funding will be used to broaden the company’s business infrastructure in anticipation of a broader product roll-out, first regionally and then nationwide, Tullie says. The company has about 35 employees, and has used D&K Engineering, a private engineering services and contract manufacturing company in San Diego, to manufacture about 50 kiosks so far.