NEW YORK – Red kidney beans are revolutionizing the Internet in a form of on-line currency known as beenz.
While the concept is not entirely new, The Beenz Co. Inc. hopes to stand out by creating an open-ended currency that, unlike its competitors, can be used around the globe.
Since beenz.com launched its Web site in June, about 100 million beenz have been released into circulation, and by year’s end the company expects a total of 400,000 customers, more than double its current 160,000 clients, said Stephen Limpe, the company’s chief financial officer.
The secret behind the company’s success is simple: beenz are more than an on-line currency – they are a marketing scheme designed to attract consumers to particular Web sites and to keep them coming back.
The system of exchange takes place entirely on-line. Customers can collect beenz, which look like kidney beans, for free by visiting, interacting with, or shopping at particular Web sites. The electronic credits earned – some 25 to 30 beenz per transaction – are stored in individual accounts on the beenz.com Web site. Once gathered, beenz can be redeemed for products such as books, toys, CD’s, services, discounts or upgrades from any of the approximately 200 merchants affiliated with the system. Companies that belong to the beenz.com marketplace include iCanBuy.com, Sony Friend Factory, CollegeClub.com and Princeton Review.
A customer, for example, visiting beenzqueen.com, a Web site that sells a variety of products and only accepts beenz as payment, is charged 4,100 beenz for a CD, 650 beenz for a Hot Wheels Car or Truck and 2,400 beenz for a best selling paperback book. Beenzworld functions as a portal or directory for all active beenz promotions on the Web.
Beenz.com releases each beenz into circulation for a penny and companies can redeem them a value of a 1/2 penny each. The value of beenz is determined by the current market and has the same worth across cyberspace, making it a globally acceptable currency without the complication of exchange rates. A beenz in the United States holds the same value in China.
Beenz.com in September received a $20 million third round of financing led by placement agent ING Barings L.L.C., exceeding the company’s target by $5 million, Limpe said.
Beenz.com plans to use the new capital to focus on its global marketing plan and to extend its presence in Europe and Asia. While the company already operates in the United Kingdom and a few other countries in continental Europe, beenz.com has established a sales and marketing force that is working to increase the popularity of its product throughout the region.
In Asia, the company has created a strategic partnership with Hikari Tsushin Inc., an investor in beenz.com, to benefit from the Japanese cellular phone distributor’s telecommunications and Internet business connections. To start, beenz.com is working to establish sales and marketing teams based in Japan and Australia.
Viventures Inc. decided to back beenz.com in its third round of financing because the company already is up and running in Europe and is well positioned to be a major global player, said Edward Colby, a partner at Viventures.
Venture investors in the latest round of financing included Gefinor USA Inc., a private equity subsidiary of the international merchant banking group, Gefinor Group; Artemis S.A., a French holding company; Hikari Tsushin; Viventures; and Larry Ellison, president and CEO of Oracle Corp., who made a $5 million personal investment.
“We invested in beenz because we first of all believe very strongly in the next generation marketing opportunities on the Web,” Colby said.
Beenz.com’s first institutional backing in March was led by Gefinor USA, which was the sole investor. At the time, beenz.com needed capital to further develop its management team and staff, as well as to fund operations and market its product. Gefinor USA found beenz.com through its network of business contacts and backed the company with about $2 million before returning for round three.
“We believe this company will be the leader in the on-line currency space,” said Mohamed Ousseimi, president of Gefinor USA. Unlike other companies, he explained, beenz.com is creating a ubiquitous currency, rather than simply a niche application for loyalty and incentive.
All funding received before March – some $1.8 million from angel investors, many of whom were friends and family – is considered a part of the company’s first round of financing. Beenz.com used the initial round to develop a business plan, organize a technology and sales force, get the business functioning and to prepare for the debut of the company’s Web site, which launched in mid-March.
The company plans to raise a fourth round of financing around the third quarter of 2000 to fund external growth and to possibly acquire or team with synergistic product extensions, Limpe said. Beenz.com expects some newcomers to join its venture investors in the next round, although a target amount has not been determined.
Selling beenz is currently the only form of revenue for the company. And while beenz.com has not been profitable to date, it has plans to increase revenue by eventually offering advertising space on its Web site, charging for company listings on the beenz.com portal, consulting with companies about how beenz can work for them and selling data on an aggregated basis.
The company hopes to exit through an IPO “sooner rather than later,” Limpe said.
BarclayCoin is a competing Web site that limits is customers to purchasing items that can be electronically downloaded, such as screen savers, software and weather reports. Beenz.com, however, offers a flexible-trading platform that can be applied to a limitless array of tangible products and services like books, games and CD’s.
“We analyzed the competition very closely, and the conclusion we came to was that because of the beenz design and the beenz system, we are confident that they will be able to grow more quickly [than beenz.com’s competitors],” Colby said.
The concept of beenz, derived from the word “been” as in “been there, done that,” was developed by London-based Charles Cohen, the company’s founder and chief technology officer. Cohen came up with the idea while shopping with his wife. The couple noticed all the rewards cards taking up space in their wallets and thought it would be great if all the cards and points could be combined, so Cohen decided to build a point system, or currency, of his own.
The remaining members of the management team are Philip Letts, who serves as the company’s chairman and chief executive officer; Nicolas De Santis, chief marketing officer; Sean Lane, chief administrative officer and general counsel; and Philippe Cothier, president of the company’s European division.
Beenz.com opened a London office in late 1998, which was followed by the formation of the company’s headquarters in New York and the opening of a San Francisco office just prior to the launch of the company’s Web site. In total, the operation employs about 60 people throughout each of its three offices.
The technology for beenz was developed in partnership with database software company, Oracle Corp., hardware company, Sun Microsystems Inc. and Exodus Communications Inc., a provider of Internet systems and network management solutions.
Beenz.com also has a strategic alliance with DoubleClick Inc., a New York-based global Internet advertising company. Under the terms of the agreement, DoubleClick will encourage its roster of Web sites to join the beenz program, and in return, beenz.com will advertise on DoubleClick’s network of sites.