Turf-Related B2B Site Lands $2M in
Second-Round Funding
Greentrac.com closed a second round of funding for $2 million recently and used part of the money to launch its new “eAuction” web-site feature.
Greentrac.com is a “green industry” business-to-business web site based in Corona del Mar. The company matches buyers and sellers of turf-related products and services, primarily golf courses and municipalities and the companies that supply and service them.
“Most of the investors are (business owners.) who use the site,” said Chuck Packard, Greentrac.com COO and a minority owner.
The largest single investment of $250,000 came from a two-person partnership, he said.
Packard, an associate of George Argyros at Arnel & Affiliates for 22 years and still a partner in some of its projects, said the site is now putting together an additional round of financing for up to $8 million. He said it would take at least two months to complete this third round.
The company has raised a total of $4 million thus far in a “blended” offering between late December 1999 and February 2000. The $2 million second round was part of this total. Greentrac.com founder and Chairman Paul Balalis said the equity valued the company at $10 per share.
Greentrac.com launched earlier this year with an eye toward snagging part of what it pegs as a $28 billion marketplace. Buyers and sellers could include cities, parks departments, golf courses, school districts and even cemeteries, said Balalis, president of a company that develops and operates golf courses.
The company reported 300 registered members as of March 31,the site launched Feb. 14,and more than $1.2 million in transaction volume. Greentrac.com takes a fee of 1% to 6% on transactions done on the site.
eAuction has $3.3 million in products listed, according to company officials.
IPO on Back Burner
While company officials were looking toward an IPO a few months ago, with Wall Street souring recently on e-commerce plays and some observers suggesting that Internet B2B sites are next on the chopping block, they have back-burnered that option.
“The focus is not on an IPO,” said Packard. “It is on running a profitable business. We built our model to make money; profitable businesses are always valuable.”
Packard said Greentrac.com plans to be profitable in 2001.
For the latest funding, Greentrac.com ceded about 25% of the company in the form of new preferred stock. Executives and insiders, including Balalis, Packard, CFO Don Norbury, and Greentrac.com registered member CEC Properties own approximately 65%.
Local Internet entrepreneur Timothy Carda holds just over 10% of Greentrac.com.
Carda, a former OC hospital executive who is currently acting CEO of Anaheim-based food service B2B site FSbuy.com, also owns stakes or options in several other Orange County B2B sites, including Medibuy.com, stemming from his licensing of the rights to the software that supports these sites (see box below).
FSbuy.com opened in January and formally launched its site two weeks ago; it closed its own second round of funding for $2 million on Monday, April 10 and plans to hire a full-time CEO and Chief Information Officer this week.
“I don’t see a lot of competitors with Greentrac,” said Carda. “There are sites selling to golf and sites selling to municipalities, but none doing both.”
Similar sites within the golf industry are iGreens.com, based in Edmonds, Wash., and SmartBuyNet at www.ngcoa.org, the Internet site of the National Golf Course Owners Association in Mt. Pleasant, S.C.
Balalis contended that those sites are not the same as Greentrac.com. “They are GPOs,” he said.
More Than Group Purchasing
The difference, he said, is that a GPO, or group purchasing organization, simply puts buyers into a confederation to achieve preset volume pricing from vendors.
Greentrac.com, as with several sites Carda has been instrumental in founding, uses a formal RFP/RFQ process in which buyers set criteria and sellers bid on deals. This, said Balalis, differentiates Greentrac.com from competing sites.
iGreens.com does have an RFQ section on its web site but Packard said this is simply a way to “qualify” a vendor and that the RFP,request for proposal,element, such as the one on Greentrac.com, is an essential difference.
Several of Carda’s B2B holdings use the same RFP/RFQ approach, as well as including the eAuction element Greentrac.com recently added. An “eCatalog” element, which the buyers on a site use for comparison shopping, is also part of many Carda-affiliated sites.
Packard says this option is coming to Greentrac.com, as well.
“It will be at least 90 days before that is up,” he said. n
