Events Tickets Co RazorGator Raises $26M Series A For Expansion
By Marine Cole, Dow Jones VentureWire Reporter
RazorGator Inc., a four-year-old online company that sells tickets
for sold-out sports and entertainment events, said it has closed a
$26 million Series A round of funding.
New investors Kleiner Perkins Caufield & Byers and Oak
Investment Partners co-led the round, which closed at the end of
David Lord, president and chief executive of RazorGator, said the
company began fund-raising for the round about the end of
October. "We were oversubscribed but the business model was
evolving," he said. "There was a great deal of interest." He said
when the company first went out to raise funding, it was seeking
less than half of the amount raised.
Proceeds from the round will be used for expansion, including
development of further partnerships with other ticketing
companies as well as with ticket providers such as sports teams,
leagues and artists, including Broadway shows. RazorGator will
also invest in its infrastructure. "First and foremost we're focused
on building our infrastructure," Lord said, when asked about
possibilities of expanding through acquisitions. "We're going to
be opportunistic as opportunities arise. All is open."
RazorGator, which was previously "funded through cash flow," is
profitable, but Lord said the company will invest heavily in
expanding its business and won't be profitable for a year or so.
He anticipates RazorGator will reach profitability again in the
fourth quarter of 2006. "We don't believe we'll need any more
funding," he said, adding that he anticipates the company could
go public in about two to three years. "We need to have a
scalable infrastructure and we need to maintain our growth rate."
Lord noted RazorGator has grown its revenue 60% to 100% each
year, but he declined to disclose actual revenue figure.
Founded in 2001, RazorGator is a Web site where consumers can
sell and buy events tickets for sold-out sports and entertainment
events worldwide on the secondary market. Events include the
Super Bowl, Final Four, Masters, U.S. Open, Kentucky Derby,
NASCAR, U2, Paul McCartney, Broadway's hottest shows,
including Monty Python's Spamalot and Wicked, The Olympics,
IRB World Cup, FIFA World Cup, European Championships, FA
Cup, Wimbledon, French Open, and top-billed London theater.
RazorGator has distribution partners like Yahoo Inc., Fox
Entertainment Group, Inc.'s Fox Sports Networks, Microsoft
Corp.'s MSN, and Tickets.com Inc. The company is also the
exclusive travel partner of the New England Patriots and
Philadelphia Eagles for the NFL's 2005 Super Bowl.
"One of the goals for all our partnerships is to provide a benefit
to our fans; we feel like we have accomplished this with
RazorGator," says Mark Donovan, senior vice president, business
operations at the Philadelphia Eagles, in a press release
announcing the funding.
RazorGator is also composed of two other subsidiaries, including
OpenField, which manages the RazorGator platform from a
software standpoint. PrimeSport International, the company's
other subsidiary, targets corporations, offering them the
possibility to take customers and employees to events and to
receive red-carpet treatment, Lord said. He noted that
RazorGator currently accounts for roughly 75% of the company's
revenue, but "the gap is starting to narrow. PrimeSport is
growing quickly." PrimeSport counts the San Francisco 49ers and
Seattle Seahawks among its partners.
Russell Siegelman, general partner with Kleiner Perkins Caufield
& Byers, told VentureWire that RazorGator already has a lead in
the secondary ticketing business but that "the company is poised
for huge expansion," he said. "The company was marginally
profitable but it needed some capital to [expand]."
RazorGator competes mainly with StubHub Inc., said Lord. It also
competes with sites such as eBay Inc. and craigslist Inc., which
also allow consumers to buy and sell events tickets. "There are
definitely other sites," Siegelman said. "There's no doubt there's
other source of ticketing." But he added that such competitors
represent more of a niche market where season ticket holders
can resell tickets they aren't using, while RazorGator
differentiates itself as it also offers tickets that were provided
directly by teams and shows.
"That's the different model, with a different skills set, and which
also required that amount of capital," Siegelman said.
"[RazorGator is] not creating a trading hub. They're trying to be
the glue that helps the teams maximize the opportunities for
people to get tickets when they want and to get the best seats."
The Beverly Hills, Calif.-based company currently has 80
employees. Lord anticipates it will have about 110 employees by
the end of the year.
As a result of the round, Siegelman, and Fred Harman, general
partner at Oak Investment Partners, joined the board of
RazorGator, which also includes Lord and Doug Knittle, cofounder
of the company and chief special event officer.
RazorGator had previously raised $5 million in venture debt from
Hercules Technology Growth Capital Inc., and the firm never took
an equity stake in the company.