SmartBargains closes new $9 million round of funding

SmartBargains Inc. has closed a new $9 million round of funding, bringing the company’s total equity financing to $47 million. Seattle-based VC firm Maveron led the round and joins initial investors Highland Capital Partners, Gordon Brothers and AOL Time Warner Ventures. The funding will be used for additional working capital to fuel the company’s rapid growth, SmartBargains CEO Carl Rosendorf tells Internet Retailer.

SmartBargains also has closed marketing partnership deals with MSN and AOL. Terms weren’t disclosed, but Rosendorf says the contracts with each portal are media buys. The MSN agreement gets SmartBargains placement and direct links on MSN’s home page according to an arranged calendar schedule, while the AOL deal gets SmartBargains similar placement and links on AOL’s welcome page every other day under its “Deal of the Day” category. SmartBargains is currently getting up to 5 million unique visitors per month, but Rosendorf says he anticipates the portal deals will increase traffic by as much as 25% within a month. The portal placements went live August 1.

Portal traffic also is expected to get a boost from the traffic that already comes to SmartBargains, drawn in by prices on branded merchandise that are up to 80% off retail. “The portals are looking for ways to differentiate themselves, and deals are so compelling that they become a user benefit to the portals. They are bringing people to the site because we are bringing them merchandise you typically can’t get anyplace else,” Rosendorf says.

The new shoppers include a significant number of first-time Internet buyers tempted by the deals on branded goods. “I can’t tell you how many, but anecdotally, I can say that it’s a large number based on the number of e-mails we get from people who tell us they’re buying online for the first time,” he says.

Toward that end, SmartBargains since June has phased in several improvements that streamline and simplify site navigation as well as the shopping cart process while boosting speed significantly. “Because some of the people coming in have not purchased elsewhere before, we wanted our processes very simple so they’d understand the steps needed to complete a sale,” Rosendorf says.