The old-fashioned vending machines that sit in the office kitchen or in the rooms that house the ice machines at hotels are soon to go extinct. Vengo Labs has redefined the concept of vending through its mini, interactive, and digital vending machines that serve not only consumer-packaged goods but also digital advertisements. The machines prioritize a seamless user experience by combining the convenience of online shopping with immediate access to products of traditional brick-and-mortar retail by blending technology with fluid design. Accepting cashless payments and providing product information, the units are strategically installed in locations where people need them the most and throughout college campuses, gyms, and hotels.
AlleyWatch chatted with founder and CEO Brian Shimmerlik to learn about the rise in popularity of digital vending and the company’s recent funding round, which brings the total reported equity funding amount raised to $12M since 2012 including a $2M successful raise on Shark Tank.
Who were your investors and how much did you raise?
Vengo raised a $7M Series B, led by Arcade Beauty – an Oaktree Capital portfolio company and the largest manufacturer of beauty samples in the world. The funds will be used to scale Vengo’s presence in colleges and gyms and to begin testing new applications, with an initial focus on the beauty industry.
Also participating in the round are SPINS, Bill Apfelbaum, Joanne Wilson, Grace Beauty Capital, and Kensington Capital Ventures. Previous investors include Tony Hsieh, Brad Feld, hip-hop artist Nas, Gary Vaynerchuk, and David Tisch.
Tell us about the product or service that Vengo offers.
Vengo is a network of mini interactive vending machines that engages consumers and drives trial of physical products, with more than 1,000 locations across gyms, colleges, hotels, and corporate offices.
Vengo Labs’ digital kiosks serve both consumer-packaged goods and advertisements, marrying retail and marketing to create targeted and effective new retail, sampling and media opportunities for brands.
What inspired you to start Vengo?
I started Vengo to learn. I was at NYU and there is no better way to learn than getting into the game.
There are Vengo’s in NYU, what is the process like for getting a Vengo installed in a university?
Selling into universities is hard-won – it is a long sales cycle with several decision makers.
How is Vengo different?
Vengo puts content and product in the sexiest, hardest to reach locations and it is a contrarian play to lock up the valuable out-of-store retail real estate. Vengo’s physical platform jumps out of the digital ecosystem into the real world. You can’t press a button and scale Vengo – the physical component is our biggest challenge and our biggest strength.
What market does Vengo target and how big is it?
Vengo is targeting all interesting spaces outside of the home. The Vengo network reaches a young, digitally-savvy millennial audience that is the toughest to reach through traditional mediums.
What’s your business model?
Vengo is focused on managing the network from the cloud and driving digital marketing revenue.
What was the funding process like?
Challenging. Having a physical component limits the market of available Series A and B capital. We did not find a strong fit with financial investors and quickly moved from top Angels to Strategics.
What are the biggest challenges that you faced while raising capital?
It is challenging maintaining the focus on growing and operating the business as capital raising is a full-time job. Vengo is at the intersection of retail, media, and CPG, so it doesn’t fit into a clearly defined bucket. Sometimes real category innovation doesn’t fit into a VC’s existing thesis.
It is challenging maintaining the focus on growing and operating the business as capital raising is a full-time job. Vengo is at the intersection of retail, media, and CPG, so it doesn’t fit into a clearly defined bucket. Sometimes real category innovation doesn’t fit into a VC’s existing thesis.
What factors about your business led your investors to write the check?
Our strategic value, innovative and immersive product and team all contributed to Vengo’s successful funding round.
What are the milestones you plan to achieve in the next six months?
Vengo is planning growth in deployment and verticals, and also plans to grow the team with new hires in various departments.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Don’t rely on funding. Grow the business and get funding from your customers.
