|
| September
5, 2000 The Bancorp Group Joins "The List." ELA Promotes PAYNET to Lessors ( many lessors do this today, such as GE Capital/CPL and Manifest-- look for others to do the same ) LeaseExchange Signs with Smart Age ( increases marketing ) Wells Fargo Completes Purchase of Charter Today USA Today Warns About Dot.Com Financing Kit: Add The Bancorp Group, Inc. (Southfield, MI) to your list of leasing companies that are no longer in business. New Century Bank, the parent of Bancorp closed up the leasing operation in Feb. Why, who knows? Gary Vetter garyvetter@crossroads-financial.com ( thank you---any additions or corrections to the list are always appreciated ). 36 Leasing Companies Major Changes American Business Leasing ( gone ) Balboa Capital ( Founder Byrne pushed out/other changes ) The Bancorp Group, Inc. (Southfield, MI) ( no longer in business ) Bankvest (bankrupt) Bombadier ( reported having problems, not confirmed ) Charter Financial ( purchased by Wells Fargo ) Commerce Security ( closed to leasing broker program ) Copelco ( sold to Citibank ) Dana ( sold off, active as captive ) DVI Capital ( out of broker ) eLease ( management team let go ) Fidelity ( acquired by EAB, a wholly owned subsidiary of ABN AMRO Bank N.V., headquartered in the Netherlands, raising funds ) Finova ( out of market place ) Franklin Bank ( no more leases ) Imperial ( sold portfolio ) Leasing Solutions ( bankrupt ) Liberty Leasing ( closed, California company ) Linc Capital ( out of vendor and broker business, Nasdaq halts stock sales, $13.4 loss last quarter ) Manifest Group--( purchased by US Bancorp Leasing and Financial, "...a win for all the parties involved," Brian Bjella. Matsco Financial ( purchased by Greater Bay Bank ) Merit Leasing ( gone ) Metwest Leasing, Spokane Wa. ( advising brokers that they have run out of funds so they are unable to fund a transaction we have there for funding. ) Metrolease--reports closing operation, will not confirm nor deny; many serious rumors floating around the marketplace.) NationsCredit, Business Leasing Group ( sold to Textron**) *"The Business Leasing Group of Nations Credit was sold to Textron and we still do broker business," Jim Merrilees. New England Capital ( sold to Network Capital Alliance a division of Sovereign Bank. Sovereign did hire two people who will run a sales office in CT, doing basically the same deals with the same people as before. Little will change in that aspect. Newcourt ( sold off ) Onset Capital ( Irwin buys 87% equity ) Orix ( closes small ticket vendor division in Portland, Oregon, "Business as usual (in New Jersey and with brokers)," says Steve Geller ) Phoenix ( both divisions ) Prime Capital ( "yes and no" sold off, may be negotiating ) Rockford ( sold to American Express ) SDI ( closed to broker programs ) SierraCities ( post $7.7 million second quarter loss, rumors abound ) T&W ( bankrupt, lost their listing ) Transamerica ( sold ) Unicapital ( $11.4 million first quarter loss chairman,CEO,CFO resign, 38 employees cutback, 8/23 BSB to use other funders reported, rumor that BSB will be "spun off", not confirmed and appears to be in the rumor stage right now. Good news, 9/1 Bank of America renews revolving credit line. )) USA Capital Leasing ( gone-bk ) Equipment Leasing Associates Promotes PAYNET ( obtain equipment lease payment information for credit approvals ) Knowledge Works announces a strategic partnership with the Equipment Leasing Association for the launch and marketing of its flagship service, Payment Information Network or PAYNET the only online service for commercial equipment leasing companies to obtain valuable lease payment history on lease applicants. The ELA-Knowledge Works agreement calls for ELA marketing support and visibility with the ELA membership. "Knowledge Works' partnership with The Equipment Leasing Association highlights the quality and integrity of the service," says Bill Phelan, president of Knowledge Works. "The industry is in need of this network because, quite frankly, there is no better indicator of how a lease applicant will pay on his lease than how he is currently paying other leasing companies. PAYNET offers the critical credit variable and streamlines the credit process, allowing for higher transaction approvals and less write-offs through better informed credit decisions." PAYNET will be demonstrated at the ELA convention this October in Palm Desert, California. The pilot program launches in 4th Quarter 2000, with an official launch set for early 2001. "We are always looking for ways to help our leasing company members be more profitable," says ELA President Michael Fleming. "Credit is a key factor for lessor profitability, so our partnership with Knowledge Works allows us to support a system that will help companies achieve a more efficient and profitable credit process." "ELA's involvement also ensures that the largest number of lessors are introduced to PAYNET, recognize its value and participate," says Fleming. "Companies contributing their credit data helps not only the entire industry make better informed credit decisions," he notes. "But ultimately helps the quality of the leasing community including their individual companies." Leasing company subscribers to PAYNET will provide a monthly download of their customers' lease payment experiences to Knowledge Works. A one-time technological set-up is required, but thereafter the monthly downloads will be handled automatically through their existing accounting system ensuring that minimal staff time and technological resources are required. PAYNET subscribers then can access the pooled data and pull Payment History Reports online for a low fee per report. For confidentiality reasons, names of leasing companies will not be associated with published credit data. This PAYNET data also will not be sold for marketing purposes. Ultimately, subscribers to PAYNET can: Have access to data that supports more informed credit decisions, increased approvals, lower delinquencies and write-offs; Obtain data that is more relevant to their credit decisions than traditional sources of credit history; Receive accurate, quality information due to Knowledge Works' data filtering process; Enjoy a streamlined credit process; and Eliminate the credit process of checking references with competitors, therefore tipping off the competition to pending deals. Knowledge Works is working with The Revere Group, as well as Northern Consulting, CEO Associates, and major accounting and software providers to ensure that PAYNET technology is user friendly and compatible with existing lease accounting systems. SmartAge.com Forms Alliance With LeaseExchange to Increase its Small Business Reach; Press Release states: Leading Small Business Site Will Offer Marketplace for Equipment Leasing SAN FRANCISCO--(BUSINESS WIRE)--Sept. 5, 2000--Today, LeaseExchange, the premiere provider of multi-lender technologies and services for equipment leasing, announced a strategic alliance with SmartAge.com Corp., the leading provider of eCommerce and online promotional services and products designed for small businesses. With this agreement, LeaseExchange's leasing solution and services are now featured in the Smartage.com Marketplace. The SmartAge.com web site offers solutions to enable members to easily create and promote their Web sites, attract customers and buy and sell online. LeaseExchange dramatically increases the chance that a leasing customer will get approved, reduces the time required to secure multiple bids, and speeds the overall process to funding. It also enables leasing companies, customers and equipment sellers to monitor the leasing process and share documents online. "Our alliance with LeaseExchange illustrates our efforts to bring a variety of useful offerings to the small business community via the SmartAge.com network of more than 1.3 million members," said Greg Stelzenmuller, SmartAge(SM) director of eCommerce sales. "It's a great match. SmartAge has demonstrated significant leadership in aggregating small business customers, and LeaseExchange provides small businesses with the fastest, easiest way to lease equipment," said Aaron Ross, CEO of LeaseExchange. About LeaseExchange LeaseExchange is the premiere provider of multi-lender equipment leasing technologies and services for equipment sellers and small businesses. It enables equipment sellers or small business customers to complete a single, reusable online application and quickly receive offers from multiple leasing companies. LeaseExchange's multi-lender technology and services dramatically increase approval rates and provide more control and visibility over the leasing process. The Red Herring, realizing that LeaseExchange is positioned to reinvent the $233 billion dollar leasing industry, recently selected LeaseExchange as one of the "Ten to Watch" companies for 2000. The company is based in San Francisco. Additional information can be found at www.LeaseExchange.com. Note to Editors: SmartAge, SmartAge.com and b2sb are service marks of SmartAge.com Corp. Smart Clicks is a registered service mark of SmartAge.com Corp. CONTACT: LeaseExchange Tom Williams, 415.701.8900 x131 or Communications Network Worldwide Kris Bondi, 415/505-5046 Cash-burning dot-coms sell at fire-sale prices 'Vulture capitalists' buy up cash-starved Internet companies By Jon Swartz and Deborah Kong USA TODAY PALO ALTO, Calif. -- At the sale of a company that calls itself the ''best bargain on the Internet'' there were no takers last week. The award-winning crime news site, APBnews.com, placed itself on the auction block Friday, with minimum bids starting at $950,000. It was a bargain-basement price tag, considering the bankrupt company has burned through $27 million in cash and was valued at $104 million just months ago. But no one bid on the company, so APB will now be carved up and auctioned off in pieces on Thursday. And you thought Survivor was brutal. In the frenetic dot-com economy, start-ups are falling faster than those annoying castaways on a remote island off Borneo. In this game, however, indifferent investors are spurning once-valuable Internet companies in a more calculated way, leaving them to fend for their financial lives. ''It's a sinking ship with too few lifeboats and too many people,'' says Jon Feiber, co-managing partner at venture capital firm Mohr Davidow Ventures. Adds Ray Lane, former Oracle president and now a general partner at venture firm Kleiner Perkins Caufield & Byers: ''It's survival of the fittest, and a lot of companies are going away the next few months.'' Too many companies with too little cash are producing an unprecedented shake out in the Internet industry. An unholy combination of top-heavy competition, cash-starved dot-coms and tight-fisted VCs is driving record mergers and acquisitions, forcing a rash of Web-related ''fire sales'' this year. The exodus has been compared to the great consolidation that winnowed U.S. auto makers from hundreds to a handful. But these changes are occurring at a faster clip, and a flock of predatory bargain hunters -- be they rivals or investors -- is circling over the dying companies, ready to swoop in for the kill with low ball buy out bids. In a study of 238 struggling online start-ups nationwide, 29 were sold at steep discounts, 41 folded and 83 scotched their plans for initial public offerings, according to market researcher Webmergers.com. Industry observers say it will get worse. ''Companies are running out of money and trying to salvage the situation,'' says Tom Jermoluk, the former Excite At Home CEO who is also a partner at Kleiner Perkins. The fire sale is on Faced with impending bankruptcy, many dot-com executives are giving up their IPO dreams to seek partners or sell (if they're lucky) to the highest bidder. Examples: * The sickly drkoop.com is recuperating with a last-minute infusion of $27.5 million in equity financing from an investor group. The investors, who installed new management, will convert a new series of shares to common stock for about 35 cents a share. Essentially, it means half of drkoop was sold at about a quarter of its current trading price. It's a steal -- if the new bosses can turn the health information site around. Their first move: Laying off 42 employees, a third of the workforce, last Tuesday. * Online apparel retailer Bluefly.com said it had just $3.9 million in cash as of June 30. Some suppliers now demand payment in advance, it said in an Aug. 14 Securities and Exchange Commission filing. The company's board formed a committee to evaluate alternatives, which include selling the company, partnering with another firm or raising more equity. * Online grocer Streamline.com said in an Aug. 15 SEC filing it could not continue operations if it did not find more funding in the next several weeks. As of July 1, it had $1.8 million in cash, the filing said. In the second quarter, Streamline trimmed marketing and put off opening some facilities and adding staff. But the savings won't be enough to fund operations through this fiscal year, it said in its filings. Streamline's cumulative losses totaled $79.6 million as of July 1. * Small business marketplace Onvia.com scooped up home improvement company Hardware.com for less than $4.5 million last month. The retail value of just the equipment and software licenses it got in the deal was almost $4.5 million. Onvia got that needed technology, and also picked up a team of developers and a new chief operating officer, Mike Pickett, who was Hardware's CEO. More than 100 companies running low on cash have approached Onvia hoping to be acquired, strike up a partnership, ''anything,'' said CEO Glenn Ballman. The company, which formed a five-person mergers and acquisitions team this spring, plans to pick up more technology, employees and infrastructure. * Then there is the plight of ChipShot.com, a golf-products retailer. It's on the verge of making money, but running out of cash and furiously seeking an investor or buyer, says CEO Brian Sroub. One short-term cash solution: ChipShot.com last month asked Golf-Serv Online, a news site it bought earlier this year, to buy itself back for $500,000. ChipShot.com had paid $250,000 in cash, plus 3 million shares of its stock. * Auto history may be repeating itself online in a Darwinian shake out. CarOrder.com suspended its Web operations Aug. 18. In recent months, Autobytel.com bought CarSmart.com, CarPoint picked up DriveOff.com, and AutoNation acquired AutoVantage. The Internet bubble burst in April, when jittery investors dumped shares en masse. At the time, financial analysts called it a normal correction to the breathtaking tech rally of the past few years. But the correction coincided with the descent of commercial Web sites, most of which were hemorrhaging cash. Wary venture capitalists quickly stopped throwing money into e-commerce and ran the other way. Money raised by business-to-consumer companies the second quarter dipped 8% from the first quarter to $1.36 billion, says PricewaterhouseCoopers in Austin. ''So much money was spent so fast on so many things indiscriminately, that it's like the morning after a night of heavy drinking,'' Salesforce.com CEO Marc Benioff says. ''The VC community is waking up to find that most of its money will never come back.'' Many blame venture capitalists. ''Every VC firm was telling e-tailers to spend millions on marketing and not to worry about profits,'' GolfServ Online co-founder Kathryn Savarese says, echoing the frustration of entrepreneurs. ''Then everything changed in the spring. We were told to stop spending money frivolously and to turn a profit.'' Venture capital firms counter that they merely are barometers of the market -- not predictors. ''In eras of suspended disbelief, if you didn't invest in companies, you lost by default,'' Feiber says. ''Entrepreneurs and investors are equally guilty, because they delved into an unknown business model.'' Adds Jeff Brody, a partner at Redpoint Ventures: ''The better-managed companies reacted accordingly and survived. We're in an era of weeding out the weaker players.'' Vulture capitalists circle Enter a new breed of ''vulture capitalists,'' who want to invest in distressed Internet companies at fire-sale prices, hoping to turn them around. ''In the '80s, the expression 'vulture capital' came into play because so many companies were going bankrupt,'' says Internet consultant Charles Millard. ''You could say this is vulture capital in the dot-com world.'' Top-tier venture capitalists, accustomed to investing in early-stage companies, likely will not be funding those in trouble, Millard says. Instead, as with drkoop, ''some firms that are not as well-known are trying to do some potentially intelligent bottom fishing.'' NetStar Ventures, a private equity firm, was one of drkoop's recent saviors and is raising $100 million to invest in other struggling Internet companies. ''In many cases, if (companies) don't get an infusion of capital, they're in the position where they might not be able to make payroll,'' says partner Todd Whiton. ''It's become an interesting proposition to many funds. But you need to have some experience in working with distressed companies and restructuring.'' Drkoop's new CEO, Richard Rosenblatt, says his company, Prime Ventures, considered four public companies in the last six weeks, ''all of which were in some form of distress'' before deciding to invest in drkoop. After the collapse in share prices for Internet firms ''we saw an opportunity,'' Rosenblatt says. ''There's no way companies can go from being the greatest companies on the face of the earth to being a complete disaster, when the fundamental business hasn't changed. The market has swung too far the other way.'' Another crop of companies is profiting from the dot-coms' woes. They advise companies on how to cut burn rates and help identify and liquidate assets. ISolve has a Web site that shouts: ''Attention: B2B or B2C Dot Coms. Lighten Your Burn Rate!'' It has worked with more than 20 Internet retailers, business-to-business firms and portals. ISolve helps identify and appraise surplus or slow-selling items, recommends ways to dispose of the assets and finds buyers. It also helps operate sites and process transactions. ISolve is particularly attractive to those that need cash fast, because it promises to find a buyer in 30 days or make an offer on the assets itself. ''Companies are really just kind of hunkering down and trying to get creative,'' says CEO Lance Lundberg. Consolidation is part of any industrial cycle. ''With so much innovation and cash out there, some companies were bound to fail,'' Benioff says. ''For every Yahoo, there are nine that don't make it.'' Lane compares the shakeout to consolidation of the U.S. auto industry through the 20th century, from 400 carmakers to three by the 1980s. And many believe the carnage will extend to the Web operations of traditional bricks-and-mortar retailers who slip up. ''It won't just be the guys with harebrained ideas, but established companies like Toys R Us who bungled e-tailing,'' says analyst Marty Gruhn, of Summit Strategies. ''Everyone will pay.'' But big off-line retailers will be able to write off losses against vast revenues. Fledgling e-tailers will have little choice but to dismantle or sell. For APBnews, that means determining who is interested in its assets and how much they'll pay. In the standing-room-only New York bankruptcy court Friday, several companies expressed interest in pieces. One was SafetyTips.com, which earlier this month offered $950,000 for the whole site, then backed out. Another, Metro New York, LLC said it would pay $37,250 for some computer equipment. APB's other assets include archives of its content, intellectual property such as Web site addresses and a database of 65,000 customer e-mail addresses. Out of chaos, opportunity The ultimate winners in the wild scramble are likely to be off-line companies and Internet firms with hefty market valuations that can dip into their stock to purchase a talented, weaker rival. ''Amazon.com and bricks-and-mortar retailers are going to buy these struggling companies for pennies on the dollar to either establish or strengthen e-commerce operations,'' Feiber says. ''They can afford to sit back and wait until they get the best deal.'' Meanwhile, some Internet incubators, which splurged billions on start-ups in hopes of nurturing the next Yahoo, are increasing their Net portfolios. ''There are a number of potential diamonds out there that just need more time and expertise to develop,'' says Steve Andriole, chief technology officer of Safeguard Scientifics, an investor in 49 Net firms. ''Our job is to identify them.'' Indeed, money is readily available to companies with viable business plans and revenues. Venture funding for Internet-related companies is expected to more than double to a record $45 billion this year, according to PricewaterhouseCoopers. Says Salesforce.com CEO Benioff: ''As long as there's money to be made, someone will be willing to take a risk -- sink or swim.''Cover storyCover story Front page, News, Sports, Money, Life, Weather, Marketplace © Copyright 2000 USA TODAY, |
 |
|||||
| |||||
|
 |
|
|
|