Deals

Coinstar rebrands as Outerwall, acquires phone recycling startup ecoATM for $350M

Image Credit: The DEMO Conference/Flickr

There are some crazy vending machines out there that sell canned bread, fishing tackle, and even underwear. Today, Outerwall announced it will acquire ecoATM to expand its network of vending machines that are far more practical.

ecoATM makes automated self-serve kiosk systems for recycling mobile devices like phones, tablets, and MP3 players. Using a patented combination of artificial intelligence, advanced machine vision, robotics, and electronics diagnostics technology, the machines scan your phone for damage, compare it to prices in secondary markets, and then make you an offer for cash or store credit. There are currently around 400 ecoATMs in 24 states.

The acquisition by Outerwall will help ecoATM scale and accelerate its national roll out.

Outerwall — formerly known as Coinstar — invested in two of ecoATM’s funding rounds. EcoATM raised a total of $31.4 million in venture capital, and Outerwall currently holds a 23 percent ownership stake. Outerwall has been around for 20 years and powers well-known kiosk systems like Coinstar money exchange, Redbox entertainment, and Rubi coffee kiosks. This acquisition will fuel Outerwall as it enters new areas of business, starting with recycled electronics.

The market for recycled devices is growing quickly as mobile penetration increases in emerging markets and people want high-quality devices at lower costs. Furthermore e-waste is a mounting problem. The EPA found that more than 135 million mobile devices are trashed every year in the United States and only 11-12 percent of those are collected for recycling. This results in 17,200 tons of e-waste, and that’s just from mobile devices. Add in computers, monitors, keyboards, televisions, etc., and that number skyrockets. Electronic waste is harmful to both human and environmental health.

In response to this alarming environmental threat, there is a growing demand for innovative solutions to mitigate the problem. ABI Research forecasts that the worldwide market for e-waste recovery will hit nearly $14.7 billion by the end of 2014. Manufacturers are setting up buy-back programs.

Outerwall gets the dual benefit of entering the lucrative and growing vertical of electronics, while also promoting sustainable environmental practices. Outerwall CFO Galen C. Smith said in a statement that Outerwall expects ecoATM to yield a positive return on invested capital in the coming years.

EcoATM was founded in 2008 and launched at DEMO in 2011. The company will stay headquartered in San Diego, Calif. Outerwall is a public company based in Bellevue, Wash.

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