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AMT
News
November
15, 2000
Press Release
B-to-b
startup raises $14M to eliminate paper checks
Xign Corp. will announce a $14.3 million
round of funding today to commercialize
a business-to-business technology that could
eliminate the use of paper checks between
buyers and sellers.
The
Pleasanton, Calif.-based startup is developing
software that simplifies and automates the
existing electronic wire transfer system
large companies use to settle payment with
trading partners.
If
successful, Xign could go a long way toward
solving one of the more vexing problems
with b-to-b e-commerce: The blizzard of
paper invoices, statements and checks that
are still required to settle electronic
transactions.
Simply
put, Xign allows corporate buyers to create
and send electronic checks -- or e-checks.
Once received and verified by the seller,
the funds behind the e-checks are automatically
deposited into the seller's bank account.
The Xign technology works with the existing
automated clearinghouse network used by
banks to electronically transfer funds between
accounts.
If
developed to its potential, Xign's software
would eliminate both paper checks and the
paperwork and manpower that support such
Old Economy payment methods, says Xign CEO
Tom Glassanos.
"Business
cycles are constipated by paper payments,"
he says. "Paper checks represent 75 percent
of all noncash transactions in the U.S.
economy, six times more than credit card
payments, so we believe there is huge potential
here to unleash b-to-b payment systems."
For
instance, Glassanos says 30 billion checks
are sent through the mail by businesses
every year, which cost about $1.50 to print
and process. If you add in the costs associated
with dealing with invoices and other elements
of the payment process, companies can spend
about $75 to handle each transaction.
Xign
is raising its $14.3 million in first-round
funding from venture capital firms Matrix
Partners and Charles River Ventures (and
yes, the VCs deposited their money into
Xign's bank account using its technology.)
The
new investment adds to a previous angel
round of funding led by Charles Schwab,
who also sits on Xign's board of directors.
Of
course, Xign faces significant competition.
Clareon, a technology spin-off from FleetBoston
Financial (FBF), is also developing similar
technology that will speed electronic b-to-b
payments and eliminate costly paper trails.
Clareon is backed with additional capital
from Mayfield Fund and Technology Crossover
Ventures, among others.
B-to-b
software firms like Ariba (ARBA) and Oracle
(ORCL) have also inked partnerships with
financial services firms to bring various
forms of electronic payments and services
to buyers and sellers conducting business
through online marketplaces.
Xign's
Glassanos says the new funding will be used
to develop commercial software. Currently,
Xign's technology is being used in a test
program by the U.S. Department of Defense
to electronically transfer funds to defense
contractors.
Xign
itself is a spin-off company of RDM Corp.,
a Canadian company that participated in
an electronic check project sponsored by
the U.S. Treasury.
For
further information please contact:
Steve
Wasserman or the team at AMT Capital at,
email: info@amtcap.com
phone: 1-800-519-0533 or 212-877-1588
website: www.amtcap.com
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