After years of touting the wonders of artificial electronic currency, venture-backed beenz.com Inc. is now in a life-or-death search for tangible greenbacks.
The online transaction rewards company, which has seen its top two executives step down and its entire staff dwindle from 265 to 30, is officially looking to sell off either some of its intellectual property or the whole company. A company spokesman said that sale probably wouldn?t go through for another three months, there are already six companies looking at the proposal.
Sources close to the company, however, report that beenz.com may soon search for a private equity infusion to help keep it afloat.
Beenz.com?s investors to date include Apax Partners, BayStar Capital, DRW Venture Partners, The Gefinor Group, Hikari Tsushin Capital, ING Barings, Kataweb, New World Cyberbase, Oracle Japan, Patricof & Co. Ventures, Softbank e-Commerce, Sycamore Venture Capital and Viventures Partners.
Whether any of its existing backers would be interested in participating in another round is uncertain, but the fact that the issuer has already burned through $80 million cannot be terribly encouraging. Even last February, before the dotcom meltdown, beenz.com was only able to secure $38.5 million on a Series C deal targeted at $50 million.
While most investors chose not to comment, one did say that he is “willing to look at any options beenz comes up with” but hasn?t “heard of more financing as an option. They haven?t even come to us with a proposal yet.”
An insider confirmed that the investors? fate has not been determined yet, saying, “It is difficult to gauge but the investors will keep their stake.”
Founded in March 1998, beenz.com was built upon the concept of rewarding Web surfers with electronic currency for carrying out online tasks such as filling out a questionnaire. The chits, called “beenz” could then be traded in at online sites like iiorganic.com, 1800giftcerfiticate.com, earthandwind.com and gameplay.com for goods.
But the downturn in the Internet economy hit beenz.com particularly hard because its customers were online businesses. The beenz spokesman said that the company is aware of the holes in its business plan and is working to correct the situation, even though management is trying to jump ship.
“The company is working in rapidly deteriorating conditions. So beenz.com launched an offline company, which marries the on- and offline site,” said the spokesman. Offline users input bar codes into beenz.com?s site allowing them to receive “beenz” for buying products.
However, this program has barely gotten off the ground. And, as a result of the markets over the past three months, beenz.com has had to scale back its operations. The company recently closed 13 offices as well as joint ventures in Japan, China, Korea and Italy. Additionally, over the past several months the company had begun asking employees in its U.K. office to volunteer to leave the company. In December it laid off 28 people in its San Francisco and New York offices.
Charles Cohen, chief executive, chief technical officer and founder of the company stepped down, as did COO and President Donald Maguire in an attempt to save the company what little money it has left. CFO and Director Stephen Limpe is now serving as CEO.
The 30 employees that have stayed behind to see beenz.com through to its unknown destination are split between London and New York. One source, however, said the New York office, which only houses accountants, could soon be forced to close its doors.
Contact Danielle Fugazy: Danielle.Fugazy@tfn.com