U.S./world – Digital shakeup – Slump trips dot-coms

By Todd Cohen

The e-philanthropy roller coaster is picking up speed.

GreaterGood.com, the Seattle-based online mall that lets shoppers donate part of their purchases to charity, has shut down and is looking for a buyer.

Also seeking a buyer is CharitEx, a New York-based maker of software to help charities manage cash and donor relationships.

And eContributor.com, a Virginia-based provider of online fundraising products for nonprofits and political advocacy groups, has filed for Chapter 11 bankruptcy protection against creditors and agreed to be purchased by Votenet Solutions, a Washington, D.C., firm that provides tech services and products to public policy and political groups.

Lacking enough cash to sustain itself, GreaterGood.com has laid off all 26 of its remaining employees and is looking at options to sell the site, said co-founder Paul Goodrich, a managing director at Seattle-based Madrona Venture Group, a GreaterGood.com investor.

“The softness in the advertising market has been a challenge,” said Goodrich, a former board chairman at GreaterGood.com, which secured more than $20 million in investment since its founding two years ago. “It costs more money to operate the site and cover expenses than we were able to generate in revenues.”

CharitEx, which raised $1 million to $2 million since its startup in April 2000, failed to secure outside financing and complete a deal to buy eContributor.com.

CharitEx has reduced its staff from 11 full-time employees in January to almost an entirely part-time crew, and is looking for a suitor of its own, says Peter Martino, the company’s CEO and only full-time employee.

“It’s a very difficult time,” he says.

CharitEx’ strategy had been to grow through mergers and acquisitions, he says. But like many Internet companies, he says, CharitEx found it tough to raise the money to finance those deals.

The most likely prospects to buy CharitEx are banks and software companies that serve nonprofits, he says.

eContributor, founded in January 1999, raised more than $4 million, generated more than $500,000 in revenue in 2000 and employed 33 people during the fall 2000 elections – but had sharply reduced its staff, says Bob Ellsworth, the firm’s chief technology officer.

He says eContributor “didn’t have the right mix of investors,” with too many “angel” backers and not enough venture capitalists with deep pockets, dot-com experience and hands-on support.

Votenet will keep those employees, including eContributor.com founder and CEO Trey Richardson, who will hold a senior post, says Charles D. Ellison, Votenet’s director of marketing and public relations.

Privately held Votenet was created in February when senior managers at Medinex Systems, a publicly held tech firm serving the medical community, purchased its division targeting the public policy and political market.

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