Cash4Gold Swimming in It

Who says venture capital is dead? All you have to do to attract big bucks from some high profile VCs these days is come up with a business model that can be sold on cable television ads like this:

Cash for gold. It's not a Snuggie, and it's not a Shamwow. It's really legit!

According to Dan Primack at PEHub, Cash4Gold recently raised a whopping $40 million from General Catalyst Partners and Highland Capital Partners, two highly regarded VC shops. Primack didn't disclose his sources and the firms wouldn't comment on the record. Cash4Gold hasn't disclosed the financing either.

Primack's story does include a recent public comment from a G.C.P. partner that sweetens the pot a bit: "Me and [Highland's Paul Maeder] here invested in a company we haven't talked about yet, where these two entrepreneurs are making $1 million a week. They're not doing anything technical, they're just innovative... The reality is that great entrepreneurs figure out how to make money."

That's a lot of bling. If buying up gold jewelry from consumers, refining it, and reselling it is such a great business model these days, why all the secrecy? Primack wonders if it's embarrassment or a fear of copycat investments.

And what's the exit strategy here? Consumers may be looking for some extra cash now, but that sentiment (hopefully) won't last forever. And gold prices are already coming down from their astronomical highs, which should give people pause before they ship off their old bangles to some address on the television screen during "My House is Worth What?" on HGTV.

Maybe the plan is to merge with the Snuggie maker and spin it off in an I.P.O. Because blankets with sleeves....now that's an idea investors might be receptive to during these tough times!

by Megan Barnett