Net frenzy strikes Rivalnet
Puget Sound Business Journal (Seattle) - by M. Sharon Baker Staff Writer
The current mania over Internet companies plays out publicly in the stock market every day, but Jim Heckman found a similar level of investor frenzy when he sought some modest venture capital funding for his college-sports Web site, Rivalnet.
Heckman said closing the venture financing, which ballooned from $1 million to $9 million, "was the most bizarre day of my life."
He started with modest expectations, seeking a mere million dollars for his Seattle company, Rival Communications, because "organizationally, we're a small, early-stage company that just six months ago was not only unproven but didn't exist."
Not only did Heckman raise nine times what he sought, "we had to turn down three times the money we collected."
On closing day certain venture capitalists "were screaming at me at the top of their lungs because they were not allowed to get in," he said. "So many people were angry. I can't describe it as anything less than bizarre."
One of the most prestigious venture firms in the business, San Francisco's Hummer Winblad Venture Partners, is among the three investment funds that did get in. Heckman said he turned down two prestigious venture firms he wouldn't identify which offered valuations that were higher than Hummer Winblad's.
"I was so impressed with Ann (Winblad, a partner) that I took a 20 percent hit on the value in exchange for having Ann on our board," Heckman said.
Joining Hummer Winblad as Rivalnet's new investors are Seattle-based Phoenix Partners and Intel Corp. Phoenix had an in from the beginning, as partner David Johnston invested in Rivalnet very early on as an individual. He's also the one that introduced Heckman and Winblad.
"Dave made the mistake of mentioning this company to me, and as he was ripping me away from the Web site, I said I wanted to meet these guys," Winblad said. "He said it's too early, but I forced them to fly down and meet with us. Everyone said `We're not ready,' but I said this train was already leaving the station, this is what we need to do and how we're going to win.' "
What's all the fuss about? Hooking rabid college sports fans and alumni up to the latest recruiting information on their alma maters through a number of college sites from Rivalnet's home page at http://www.gorival.net.
By partnering with sports publishers at many of the nation's top football colleges, Rivalnet has quickly assembled a site with a vast amount of detailed information.
The arrangement gives it free advertising in scores of college programs distributed to season ticket holders, including those for some top colleges known for their rabid fans and alumni: Notre Dame, Michigan, Penn State, Texas, UCLA and Alabama.
It also gets inexpensive access to a virtual staff of some 200 people who write for individual college publications across the country. Those staffers give Rivalnet sites the details on daily recruiting efforts, injury reports, game notes and so on.
That's information that larger sports sites such as ESPN and CBS's Sportsline don't have and probably can't offer without spending millions on reporters or stringers.
Rivalnet's specialty is recruiting information, an area that official college publications can't touch due to National Collegiate Athletic Association rules. But it's information that any fanatic football follower wants to have.
Last October, traffic to the site was 220,000-plus a day and skyrocketing. Heckman declined to reveal more current traffic numbers, citing competitive reasons.
"We've changed substantially since last October," he said. "Basically the business model is the perfect model, and now we need to fully exploit it."
Rivalnet has grown its official staff of 10 to more than 20, and Heckman said the new funding will help add another 20 people. He is mainly hiring developers, but everything from receptionists to senior vice presidents as well. In addition, the money will help Rivalnet move into 10,000 square feet of office space in downtown Seattle.
Part of Heckman's plan is to revamp the Rivalnet site and sign some major partnerships, some of which he plans to announce in the next several months. Intel Corp. can help land some of those partnerships, which is one reason Heckman chose the Santa Clara chip maker as an investor.
An Intel spokesman said the company's venture arm invests in companies that can help grow the personal computing industry by bringing new users or providing new uses for computers, and Rivalnet fit the bill.
"Sports is one of the areas we're interested in, but really anything that promotes new uses or interactivity or brings new users to the PC, we're interested in," said Robert Manetta, an Intel spokesman.
For Winblad, the opportunity to invest was a no-brainer. Her father is a renowned high school basketball coach in Minnesota. Her founding partner, John Hummer, is a former NBA player for the Seattle SuperSonics. An avid sports fan herself, she was impressed with the company's reach and ability to keep visitors at the site for long periods, as well as with Heckman and his team.
"Their reach is unbelievable. And it's sticky," Winblad said using industry jargon for the length of time people spend at a site. "I can't go there often because I stay there too long. When you have to tell the law firms to stop looking at the site, and start looking at the documents, you know you have something."
Heckman and his team scored extremely high on general business instinct, and earned rave reviews from partners, she said.
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