Vigix Raises $1.5M More, Looks to Reinvent Vending with Networked Kiosks

News flash: This company actually makes physical stuff for businesses. Not social software, not a mobile app or backend system, not a retail website or aggregator. And it has been able to raise some new money to expand its product. Its goal: to provide automated kiosks (see image, right) for dispensing everything from loyalty cards and luggage tags to cell phones and iPods.

I’m talking about Cambridge, MA-based Vigix, which closed a $1.5 million Series A-1 round this week, led by Still River Funds, a venture firm based in Waltham, MA, that invests in hard technologies and life sciences. Vigix previously raised a smaller A round from investors including LaunchCapital, Launchpad Venture Group, and Race Point Capital. The company has taken in a little under $3 million to date, says CEO Steve Pytka.

Vigix has been around the block. The company started in 2004, founded by Eduardo Alvarez (who is president), and its product has been in development for years. Selling kiosks is a very challenging business, Pytka says, with a market full of entrenched competitors like Redbox, NCR, and ZoomSystems.

“We were able to survive two very difficult years. Nobody was investing in new technology,” says Pytka, a veteran of Streamware, Gazelle, Wang, and Xerox, who joined Vigix in early 2008. “We’re starting to see customer traction in a big way.”

The Vigix kiosk, designed by Cambridge-based Ideo, is roughly person-sized (six feet tall, under 200 pounds, takes up 2 square feet) and includes a video screen and a unique dispensing mechanism. Unlike a traditional vending machine, the kiosk has no moving parts; a special hook holds each item inside, and a pulse of heat melts the hook so the item falls through the dispenser.

The machine also includes software so it can be monitored and controlled over a wireless network; ongoing software licensing is an important part of the company’s revenue stream, Pytka says. And the kiosk uses a cartridge of products that can be restocked by a courier such as UPS. The goods are never touched by retail employees, so that could help stores cut down on theft (“shrinkage”), Pytka says.

Besides Ideo, Vigix has forged key partnerships with Flextronics for manufacturing, Kodak for installations, and IBM for software. These relationships have been instrumental in helping the small company gain traction, Pytka says. Vigix has five full-time employees and is now looking to expand its engineering support and sales and marketing team.

In the past year, the company has won a couple of $250,000 contracts, Pytka says. Its customers include Qantas, the Australian airline (which is using Vigix kiosks for self-service luggage check-in), and South Carolina-based wireless provider Clear Talk (which sells prepaid cell phones and accessories). The firm has 25 kiosks out in the field so far.

Vigix clearly has a long way to go, but its “rapid growth” has Pytka talking about putting its kiosks in all manner of retail stores (think jewelry, pens, watches, electronics), as well as in airports, train stations, hotels, movie theaters, and stadiums.

“It’s a classic hockey stick,” he says.

Trending on Xconomy