Princeton eCom Corp., which had been quietly shopping for a buyer, has taken itself off the auction block and plans to step up its marketing on the strength of a $10.3 million capital infusion from a new group of venture backers.
The investment was announced last week as one of Princeton's current backers, New Century Equity Holdings Corp. of San Antonio, also revealed that it was going out of business. New Century will sell its roughly one-third stake in the New Jersey payment processor for about $10 million to the same group that supplied the new financing.
In conjunction with the transaction, the publicly held New Century disclosed some key strategic and sales data about Princeton, which is privately owned and rarely provides a detailed peek under the hood of its financial engine.
A proxy statement filed with the Securities and Exchange Commission said that late last year the company had offered to sell itself to "several potential strategic acquirers," but that talks came to naught.
Princeton's president, however, said it is no longer for sale. "I can tell you very firmly, we are not in the market," said Ronald Averett, who is also the chief operating officer. "We are very committed right now to the growth we are managing."
The filing also revealed that Princeton has narrowed its financial losses and improved the performance of its electronic system.
New Century first invested in Princeton in 1998; in all, it has put about $77 million into the company. In the last two years, Princeton has slashed its losses, to $9.4 million last year and $11.5 million in 2002, from $64.2 million in 2001. Revenues inched upward, to $32.6 million last year from $31.5 million in 2002 and $21.5 million in 2001.
Founded in 1983, Princeton was a pioneer in e-commerce; it claims to have been the first company to present a bill over the Internet. But it has been eclipsed in the online billing market by competitors such as CheckFree Corp. of Atlanta and Metavante Corp. of Milwaukee, the technology subsidiary of the banking company Marshall & Ilsley Corp. Since 2002, Princeton has repeatedly missed its executives' goal of operating profitability.
With those gains on the books, its new investors voiced strong confidence in the company's future. "The world is moving to electronic payments. They have a very strong position across multiple channels," said Steve Piaker, a partner at Conning Capital Partners of Hartford, Conn., which led the financing round for Princeton. "We really look for fantastic management teams to partner with."
Conning, a specialist in financing private companies in financial services and health care, has worked with start-ups that include Telebank (now the E-Trade Bank unit of E-Trade Group Inc.), Home Financial Network (now Sybase Inc.'s Financial Fusion), and Magnet Communications Inc. (now part of Digital Insight Corp.), Mr. Piaker said.
Conning Capital was joined in the newest round by existing investors Mellon Ventures, the private equity partnership of Mellon Financial Corp., and Lazard Technology Partners. In addition, Conning, Mellon, and Lazard have agreed to buy out New Century's share of Princeton.
Princeton's losses were a factor in New Century's decision to sell its stake and put itself out of business, though the company had other difficulties. Princeton was the final major holding in New Century's investment portfolio. Its last investment came in September, when Princeton raised $5 million from New Century as well as Lazard, Mellon, and Terra Lycos Ventures LP, the venture capital arm of the Internet company Terra Lycos Inc.
New Century disclosed that it had been unable to participate in the most recent round of financing because of its own deteriorating financial position. The company said it will ask shareholders to approve its dissolution after it sells Princeton to Conning, Mellon, and Lazard probably in late July.
David P. Tusa, New Century's executive vice president, chief financial officer, and corporate secretary, who was listed as the contact in its proxy statement, could not be reached for comment.
Mr. Averett said Princeton is now enjoying the benefits of a reviving economy and plans to compete more aggressively for new business in the year ahead, using the proceeds from its latest financing. "We are going to raise our visibility in the marketplace," he declared.
"We are in the strongest sales period in the five years I've been with the company," he said. Mr. Averett would not discuss details of recent contracts, but said, "We have landed more deals in the first quarter of the year than we landed in all of 2003."
The most interest is coming from billers that want extra fast payment. The electronic presentment of bills online is still tougher to sell.
