Yahoo! - idealab, Goldman invest in E-mail payment firm PayPal

Thursday, January 20, 2000

idealab, Goldman invest in E-mail payment firm PayPal

NEW YORK, Jan 20 (Reuters) - PayPal.com, a private firm that provides electronic cash payments through E-mails, on Thursday said it received $23 million from venture capital firm idealab Capital Partners and investment bank Goldman Sachs Group Inc. (NYSE:GS).

The investment gives idealab and Goldman roughly a one-third stake in PayPal, valuing the start-up firm at around $70 million. PayPal, which is based in Palo Alto, Calif., earlier raised $5 million from high-profile investors such as Finnish wireless phone company Nokia (NYSE:NOK) and Germany's largest bank, Deutsche Bank AG.

PayPal enables people with Internet access and a credit card to electronically send cash to anyone with an E-Mail address. The company does not charge for the service but aims to make money on interest on balances and advertising.

"There are lots of ways to pay Internet retailers, but there is not really a way to pay a consumer," said David Sacks, PayPal's vice president of strategy, in a telephone interview. "We think (E-mail payments) are basically the way it's going."

PayPal will use the $23 million investment to attract new customers, to expand overseas, and to make its service available on mobile devices. The firm currently employs about 40 people.

PayPal, which declined to disclose the number of users its service has attracted, aims to attract a few more private investors before going public, Sacks said. The next investor round should value the company at "several hundred million dollars," he added.