US-Israeli start-up RichFX Inc. was sold for $3.1 million in cash yesterday to competitor, Britain's ChannelAdvisor Ltd., after raising $60 million from venture capital funds. The New York-based company filed for Chapter 11 bankruptcy protection in a Manhattan court a year ago
ChannelAdvisor is also a start-up that has raised $50 million from venture capital funds.
RichFX was founded 11 years ago as Webglide by Tomer Ben-Kiki, Tal Kerret, and Yair Mann. Ben-Kiki moved on to found what appears to be a more successful company, Oberon Media Ltd. RichFX sought to develop 3D online malls. At its peak, the company had 130 employees in Israel, New York, and Atlanta. It raised capital from 18 venture capital funds, including Pitango Venture Capital, Plenus Venture Lending Fund, Platinum Neurone Ventures, Veritas Venture Partners , Giza Venture Capital, TechnoPlus Ventures Ltd. (TASE:TNPV), Poalim Ventures Ltd., Morgan Stanley Private Equity, ABS Ventures, Coral Capital Management, and Thomas Weisel Partners, strategic investors RealNetworks Inc. (Nasdaq:RNWK) and Japan's Itochu Corporation (TSE:8001), as well Igal Ahouvi and Yossi Vardi.
RichFX's largest outstanding debt is to Plenus, which lent the company $3 million in May 2007. Plenus was the only investor that helped the company after other investors abandoned it, but subsequently asked a New York court to appoint a temporary receiver for the company. This action kept RichFX as a going concern. According to various reports, Plenus will get most of its money back.
The venture capital funds that invested in RichFX, especially Pitango and Poalim Ventures, will make hefty write-offs. RichFX's business may one day make a profit, but it will be for other investors.
Published by Globes [online], Israel business news - www.globes-online.com - on March 25, 2008
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