Rarities Dealer Collects Hard-To-Find Funding and Looks for More

Although the private equity market seems to have slammed the door on e-commerce plays, online collectibles merchant Wall Street Rarities pushed through the crowd of e-tailers last week to close a $3.5 million Series B round.

With term sheets that put the issuer’s pre-money valuation at $35 million, St. Louis-based Gryphon Holdings led the transaction with a $2 million investment. The recent infusion brings Wall Street Rarities’ total venture funding to $13.5 million, which included a Gryphon-led $4.5 million Series A deal last November and a prior angel round that netted $5.5 million.

Wall St. Rarities is also in the midst of marketing its next venture round, which is expected to close in August. The upcoming deal is designed to raise at least $10 million with a pre-money valuation of $45 million.

“There’s a huge vacuum in the market, a shortage of retail conduits: thousands of mom-and-pops and hundreds of thousands of collectors,” said William Anton, president and chief executive officer with Wall St. Rarities, in explaining his company’s strategy of virtual consolidation. “I’m not worried about traffic, I’m concerned about how quickly the inventory’s going to go.”

The company last week celebrated the opening of its retail gallery on Wall Street, in a converted banking space, with a collection of American coins, paper money, documents and art priced between $100 and $2 million. Its e-business site will launch later this week and the proceeds of this latest round will be used to boost sales and marketing efforts and grow inventory.

For Gryphon, however, Wall Street Rarities is not an e-commerce play, but an investment in technology with applications beyond the niche of coin enthusiasts.

Together with Scient Corp., Wall Street Rarities has developed Intellicollect, a proprietary, patent-pending online collection management and direct marketing system. The technology allows hobbyists to register and catalogue their collections and create a wish list, enabling the company to generate pricing information and direct sales pitches.

“Would we invest in a coin dealer? No, that’s not what we do. Our investment is, this is a technology enabler,” said John Wehrle, managing director with Gryphon. “The extendibility of the product into other markets which is attractive.”

Wall St. Rarities also wants to add strategic partners like distributors or collectibles retailers to its investor base.

“We’re going to watch how this vertical receives the product, and how much traction it gets, and then evaluate where we stand,” Wehrle said. “The bulk of the cost is behind us, and now we’re concentrated on its extendibility into a different niche. In the end, it’s an aggregation of niche market plays based on a fairly robust data engine.”