Telezoo Feeds on $3M First Round, Preps $15M Second Round

In March 1999, a business-to-business telecommunications marketplace named Telezoo.com felt the time was right to upload its Web-based product. While the decision might have been a no-brainer for someone following a dated economic model, current market trends deemed it an aberration because the company had yet to complete a single round of fund raising.

Almost one year later, and with a much deeper experience base, Telezoo.com recently completed its initial venture financing, raising $3 million from Lazard Technology Partners. In addition, the company plans to introduce investors to a larger private placement, most likely around $15 million, in either May or June.

The cause for the initial delay was a feeling among Telezoo.com management that the firm already had sufficient funds to sustain, and even build, its present operation. Now, of course, management has a different view.

“We’re represented by Cooley Godward LLP, and they told us that Wall Street doesn’t care how much actual money you have,” said Elias Shams, chief executive, president and “chief zookeeper” at Telezoo.com. “They said that if you don’t get the backing of the [venture capital] community, you won’t get anywhere when trying to go public.”

It’s important to note, though, that it wasn’t the advice alone that prompted Shams to seek out venture firms. Rather, Shams says a multitude of interested investors from the U.S. and Great Britain came knocking on his door. Although most of them did not appeal to telezoo.com, the high level of interest showed him there were VC dollars to be had.

“One thing I didn’t like about most of the VC firms is that they were all asking these financial questions like What’s your exit strategy?’ to me even though I’m not the company’s financial guy,” Shams said. “I’m just a techie, a computer geek, and what I liked about Lazard was that they understood what we do and everybody’s role here because they took the time to understand.”

Proceeds from the transaction will be used to fund advertising and marketing.

Based in Arlington, Va., telezoo.com brings the entire telecommunications industry together within one virtual marketplace. There equipment vendors, system integrators and service providers can match their products to customer needs. This service is intended to reduce costs, increase qualified sales leads and provide information.

In addition to completed its first private placement, the company recently named George Hennessy as its new vice president of corporate development. Previously, Hennessy was director of business development for the Americas at Fantastic Corp.