Irvine-based InvestorIQ.com PLC, a stock analysis service that launched operations last month, is looking to land $5 million to $8 million in a second “Level 3” round of funding, company officials said.
The site, which offers reports and data on dot-com, technology and other stocks for individual investors, has pulled in a few thousand dollars in revenue so far, said Stuart Frost, InvestorIQ’s co-founder and chief executive.
Frost said he hopes to have about 10,000 subscribers in a year’s time, bringing in a few million dollars in revenue per year. That would be enough to sustain operations, Frost said, but his goal is to grow beyond that.
Frost and wife Julie Bassett, the company’s co-founder and president, are talking with individual investors and corporate partners about taking a minority stake in InvestorIQ.com, he said.
“We’d like to keep as much (of the company) as possible,” said Frost, who along with Bassett, owns 64% of InvestorIQ.
The company employs seven full-time and six part-time analysts and 16 people in all.
Bassett calls InvestorIQ “independent” because neither the company nor its analysts trade the stocks it reports on, unlike brokerages such as Merrill Lynch & Co. and Salomon Smith Barney Inc.
InvestorIQ has competition from the hoards of stock information sites, including The Motley Fool and TheStreet.com. There are thousands more offering advice, Wall Street secrets and “must-have” stocks.
Many online sites provide only commentary on stock performance and trading histories, and do not make recommendations, Frost contends. Like the brokerage houses, InvestorIQ provides in-depth reports of companies, analysis of industries and stock picks.
A more formidable competitor in Frost’s eyes is The Red Chip Review, a securities analysis firm in Portland, Ore.,recently acquired by FreeRealTime.com, Irvine,which has both print and online reports. Like InvestorIQ, Red Chip doesn’t sell any stock, but only covers companies with small market capitalizations.
Frost and Bassett plan to take the InvestorIQ show overseas soon on the coattails of expansions there by online brokerages such as E*Trade Group Inc. and Ameritrade Holding Corp. Frost said he also wants to be able to capture an audience in Europe.
Frost got the idea to start InvestorIQ after founding a software company, Select Software Tools of Santa Ana, in 1988. He took it public with a market capitalization of $140 million when it had $26 million in annual revenue and 300 employees.
Frost left the company in 1998, and, after two months of “kicking back” and taking tennis lessons, he and his wife got the urge to work together again. So they worked up a business plan. “We consider ourselves serial entrepreneurs,” Frost said.
Frost and Bassett started InvestorIQ in 1999 with about $200,000 of their own money. Since then they have raised nearly $3 million. At its first valuation, Frost said the company was pegged at $13.3 million. As for its value now, he said, “It depends on the climate. You are only as good as your last round. But you have to do a deal.” n
