A Dot-Com Marriage That Works

Business: Shopping.com offers an online comparison-shopping Web site.

Founded: It was formed last year as combination of DealTime, a shopping search engine, and Epinions, a site that offers consumer reviews. As a result of an acquisition, the investors of Epinions exchanged their equity stakes for a smaller proportion investment in the combined company.

Headquarters: Brisbane, Calif.

Employees: 150, currently. In January 2003, the combined companies of DealTime and Epinions employed about 130.

Business model: The company derives revenue from merchants who pay for referral.

VC raised to date: $162M for both companies combined.

DealTime raised $117M in several rounds of financing, the most recent was a $3M Series F in September 2002. Epinions raised $45M in three rounds, including a $12M Series C in February 2001.

Investors: A partial list of DealTime investors includes AOL Time Warner, Advanta Partners, AxiomVenture Partners, Bain Capital, Banc of America Securities, Hollinger Capital, Israel Infinity Fund, Israel Seed Partners, Nomura International PLC, Odeon Capital Partners, Singapore Telecom, UBS Capital Corp. and WaterView Advisors.

Epinions investors include ABN AMRO Corporate Investments, AOL Time Warner, August Capital Management, Bertelsmann Ventures, Bowman Capita and Dell Ventures.

Directors: Bill Gurley of Benchmark Capital; John Johnston of August Capital; Michael Eisenberg of Israel Seed Partners; John Connaughton of Bain Capital; and Reinhard Liedl of Bertelsmann Ventures.

Financials: Both companies were profitable as of the third quarter of 2002, says Nirav Tolia, Shopping.com’s COO, who initially was associated with Epinions.

New York-based DealTime generated around $30M in sales in 2002. In 2000, the company reportedly filed for an IPO, but never completed the offering.

Formed by a group of former Yahoo employees, Epinions allegedly generated much smaller revenue.

Notable: Nielsen/NetRatings reported that Shopping.com attracted 14.9 million unique users in November. Currently, the company is the fourth biggest shopping Web site in terms of viewership. Competitor NexTag attracts some 6.2 million unique monthly users, Nielsen/NetRatings reported.

Current status: While Shopping.com has concentrated on building the combined company, it hit its revenue targets north of $70 million.

The company has bigger plans as it embarks on challenging the market dominance of the big three Web-shopping sites: eBay, Amazon.com and Yahoo!Shopping.

Thus far, the industry Goliaths have not been slayed by the challenging David: eBay is on top of the list with 46.9 million users. Shopping.com will continue spending on product development at least in the next two years. Tolia says that the company does not have current plans for an IPO.