July 16, 2002 1:25 PM PDT
Wine.com harvests funds, chairman
Formerly known as eVineyard, Wine.com raised $9 million in the first part of its fourth round of funding. Chris Kitze, who founded Yaga, Xoom.com, NBCi and Point Communications, led the funding round and will become chairman of Wine.com after the second part of the funding round closes in about 60 days.
Wine.com will use the money to fund its operations until it reaches profitability, which it expects to hit in the third or fourth quarter of next year, Chief Executive Officer Peter Ekman said. The company plans to diversify beyond just selling wine to consumers to focusing on selling wine as a gift item and on acquiring fine wines for high-end collectors and restaurants, he said.
"eVineyard has had some severe challenges," Ekman said. "For the company to go forward, and be successful, we've had to do a lot of changes."
eVineyard's Wine.com is one of the few survivors in the online wine market. The company bought the name and assets of better-known rival Wine.com before it filed for bankruptcy last year. Wine.com had merged with Amazon.com-backed WineShopper.com in 2000.
But times have been tough for eVineyard's Wine.com as well. The company has undergone a wholesale restructuring over the past several months to address its own problems, which included persistent losses and a lack of expertise in wine retailing, Ekman said.
A former executive of French sales conglomerate LVMH Group, Ekman came on board as the new CEO in March. The following month its longtime president and chief executive, Larry Gerhard, left the company after serving since January as chairman. Meanwhile, the company began a series of layoffs that cut its staff from 58 employees in April to about 30 now.
Wine.com, which took on its new moniker only last week, moved its headquarters from Portland, Ore., to San Francisco at the beginning of this month.
Wine.com's new financing and restructuring comes amid a resurgence in the online wine market, specifically in the business of selling collectible wines. Last November, eBay announced that it would reopen sales of wine on its site, but only through approved wine dealers. As part of an agreement announced last month, USWineAuction is listing its inventory of collectible vintages on Yahoo's auction site.
Wine.com has the option to raise another $1 million in the second part of its funding round. The company has raised $39.8 million total. The company used part of the funds from this round to buy out some of the company's previous investors, Ekman said.