January 20, 2000
PayPal.com Lands $23 Million Investment From idealab Capital Partners And Goldman Sachs
Second Round of Financing Will Drive Significant Expansion of First Email Payment Network
PALO ALTO, Calif., Jan. 20 /PRNewswire/ -- PayPal.com, the inventor of email payments, today announced the completion of a $23 million second round of equity financing from idealab Capital Partners (ICP) and Goldman Sachs Group, Inc. ICP and Goldman Sachs become the latest high-profile investors to recognize and support PayPal.com, joining wireless communications giant Nokia and global financial services leader Deutsche Bank. Nokia Ventures and Deutsche Bank led the company's first venture round in June after a seed round in January.
"This significant second round of equity funding allows us to continue our aggressive expansion of leading-edge payment services," said PayPal.com Chief Executive Officer Peter Thiel. "The backing of top-tier investors like ICP and Goldman Sachs validates the growing acceptance of email payments and recognizes the potential of this new e-commerce category."
PayPal.com will use the financial and strategic support of ICP and Goldman Sachs to drive aggressive customer acquisition, expand internationally, and support new mobile device platforms. PayPal.com also expects to expand its new business enterprises, such as providing the infrastructure for person-to-person payments on auction sites and virtual communities.
"PayPal.com is bringing a new value to the consumer marketplace with its payment network," said Bill Elkus, co-founder and senior managing director of idealab Capital Partners. "Its team has the talent and drive to execute on its vision. We believe PayPal.com is solidly positioned to assert its leadership in the email payment space."
"PayPal.com offers an important Web-based payment system," said Randall Blumenthal, Managing Director of Goldman Sachs. "The solution fills a demonstrated consumer need and the management team is highly focused on realizing its strategic goals."
"We are building the payments operating system for the world," said CEO Peter Thiel. "In the same way that fax machines leveraged an existing phone infrastructure to speed widespread adoption, our technology leverages the existing email network. PayPal.com turns the current email network into a payments network."
Momentum for Email Payments
Since the launch of PayPal.com in October 1999, the company has generated significant momentum for its email payments solution. It was recently named "Product of the Month" in the Online Banking Report, which declared that "PayPal redefines how consumers transfer funds." The Wall Street Journal called PayPal.com's service "on the money," and the company has also received favorable attention in such publications as Financial Times, PC World, and Interactive Week.
Analysts, such as Robert Sterling of Jupiter Communications, seem to agree that PayPal.com "may have a handle on something quite good." "I think it's rather innovative. It's a simple, straightforward idea," added Avivah Litan, research director of payment systems at GartnerGroup.
How PayPal Works
PayPal.com is the first payment service that enables anyone with a PC or handheld device to instantly and securely pay anyone with an email address. Unlike alternative payment systems that require users to know bank account numbers of payment recipients, PayPal.com users only need an email address to beam a payment.
After registering for the free service at http://www.paypal.com/, consumers simply enter the recipient's email address and a dollar amount. The money is debited from the payor's credit card or bank account and credited to the recipient. The transaction takes seconds to complete. If the recipient is not yet a PayPal user, he or she simply registers on the PayPal.com site after receiving an email notification, and is immediately credited with the money. Funds may be withdrawn at any time by direct deposit to a bank account or a personal check from PayPal.com. Users also may opt to beam the money on to others.
PayPal.com, based in Palo Alto, Calif., is owned by Confinity, Inc. It is the first Web-based payment service that enables consumers to beam money to any email user via their PC or PDA. PayPal.com's state-of-the-art encryption technology and cutting-edge Web-server technology make it one of the most secure electronic payment systems to date. The system's security was developed under the guidance of encryption pioneers and Stanford University professors Dr. Martin Hellman (inventor of public key encryption) and Dr. Dan Boneh. PayPal.com is working with leading platform and financial service companies to deploy PayPal.com worldwide. Its key strategic and financial backers include idealab Capital Partners, Goldman Sachs, Nokia Ventures, Deutsche Bank, and Bill Melton, founder of Verifone.
About idealab Capital Partners
Founded in 1998, idealab Capital Partners (ICP) is a Southern California-based, nationally-focused venture capital fund affiliated with idealab!, a leading creator and operator of Internet businesses. Co-founded by Bill Elkus and Bill Gross, ICP seeks to build world-class companies through its knowledge of the participants, technology and culture of the Internet. Among ICP's companies are: GoTo.com, eToys, MP3.com, NetZero, Tickets.com and CarsDirect. Additional information on ICP and a complete list of its companies can be found on the Web at http://www.icp.com/.
About Goldman Sachs
Goldman Sachs is a leading global investment banking and securities firm, providing a full range of investing, advisory and financing services worldwide to a substantial and diversified client base, which includes corporations, financial institutions, governments and high net worth individuals. Founded in 1869, it is one of the oldest and largest investment banking firms. The Firm is headquartered in New York and maintains offices in London, Frankfurt, Tokyo, Hong Kong and other major financial centers around the world.