Someone please tell me why is worth $40 million in funding?

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From: Adam Rifkin -4K (
Date: Wed May 03 2000 - 13:11:26 PDT

In November, Snapfish got $7.5 million in cash to build themselves out.
Today, they secured another $33 million in cash to build themselves out
some more. From respected names like Mayfield and CMGi, too.

Can anyone give me a plausible explanation why the VC's think this
company is worth so much? You get bonus points for creativity but lose
points for cynicism. :)

What kind of brand name is Snapfish anyway?

> Secures $33 Million in Series B Funding
> Wednesday, May 3, 2000 08:08 AM
> Raises Largest Amount of Funding Among Online Photo
> Services to Date Top Venture Capital Firms and Strategic Investors Back
> Free End-to-End Photo Service
> SAN FRANCISCO, May 3 /PRNewswire/ -- Corporation today
> announced the close of $33 million in its Series B round of financing
> led by Japanese investor, Trans Cosmos, with new investors Audax
> Ventures, BellSouth and Compaq, as well as previous investors CMGI
> @Ventures, the venture capital affiliate of CMGI (Nasdaq: CMGI, news,
> msgs), and Mayfield Fund.
> Corporation's first round of financing of $7.5 million
> closed in November 1999 and was led by Mayfield Fund and CMGI @Ventures.
> The second round brings the total amount of funding raised by
> to $40.5 million, which is to date the largest amount of
> secured funding disclosed in the online photo sector. will
> use the additional resources to expand the depth and breadth of its
> Internet service, which launched in April, and for marketing efforts to
> build the brand.
> is the only photo service that offers developing, printing,
> digitizing, and online storing and sharing of users' photographs -- all
> for free. Unlike other offerings, the service is for
> everyone, users of traditional 35 mm film cameras as well as those who
> own digital cameras.
> One of Japan's leading Internet investors, Trans Cosmos has had
> tremendous success bringing U.S. technology brands, such as NetRatings,
> DoubleClick and RealNetworks, into the Japanese market. Its lead
> investment in is designed to expedite the company's
> expansion into Japan, one of the largest and most active photography
> markets in the world.
> "We invested in because it's the only player that combines
> the three critical ingredients required for success," said Mark Kalow,
> managing director of Trans Cosmos.
> Kalow continued, "First, addresses the vast number of 35 mm
> film camera users who are interested in sharing their photos online.
> Second,'s award-winning free business model and its
> strategic partnerships demonstrate visionary thinking with respect to
> creating a business that truly leverages the New Economy. The third
> element is the company's experienced management team. All these factors
> position well for leadership in the online photo market."
> In addition to funds raised from leading venture capital firms,
> BellSouth and Compaq have joined the Series B round as strategic
> investors. These strategic relationships support's national
> branding efforts and are expected to expand its reach to targeted groups
> of American consumers.
> Compaq, the world's largest supplier of computing systems, will develop
> co-marketing programs with their top-selling personal computer, the
> Compaq Presario. The strategic relationships with both companies expand
>'s potential to market its services to the family market.
> Raj Kapoor, Corporation's co-founder, president and CEO
> said, "In today's market, strong financing from top backers will
> separate the winners from the losers. We are very fortunate to be backed
> by leaders in the venture capital space as well as by strategic partners
> whose comprehensive national consumer branding campaigns complement our
> own."
> About
> is positioned to dramatically redefine the consumer
> photography market by providing the first complete photo service that
> offers film developing, printing, storing and sharing online, all for
> free. will provide both film-based and digital camera users
> with the ability to seamlessly and effortlessly share, store and order
> reprints with unsurpassed security.
> recently earned the coveted award for Most Innovative
> Business Model from a Startup in 1999 from Internet World Magazine. The
> magazine noted that, because serves customers with 35 mm
> film, it "has access to the vast majority of picture-takers today, who
> will also presumably be the digital camera wielders of tomorrow."
> has a strategic partnership with District Photo, the
> nation's largest mail order photo finishing lab, with more than 50 years
> of experience in the market. District Photo has also taken an equity
> stake in the company. uses Kodak paper and materials for
> all of its processing.
> With consumer photography representing a $14.9 billion market in the
> U.S. alone, is poised to provide consumers with
> breakthrough benefits in online photography and reinvent an enormous
> consumer category in the process. The company is based in San Francisco,
> California. Additional information is available at the company's Web
> site at
> About CMGI, Inc. and CMGI @Ventures:
> With more than 70 companies, CMGI, Inc. represents the largest, most
> diverse network of Internet businesses in the world, including both CMGI
> operating companies and synergistic investments made through its venture
> capital affiliate, CMGI @Ventures. CMGI leverages the technologies,
> content and market reach of its extended family of companies to foster
> rapid growth and industry leadership across its network and the larger
> Internet Economy. Compaq, Intel, Microsoft, Pacific Century CyberWorks
> and Sumitomo hold minority positions in CMGI.
> CMGI's majority-owned operating companies include Engage Technologies,
> NaviSite, 1ClickBrands,,, AdForce, Adsmart,
> AltaVista, CMGion, CMGI Solutions, Equilibrium, Flycast, iCAST,
>, NaviPath, SalesLink, Tribal Voice and CMGI
> @Ventures has ownership interests in 57 Internet companies, including
> Lycos, Inc., Critical Path, Silknet,, Ventro and
> Vicinity.
> CMGI's corporate headquarters is at 100 Brickstone Square, Andover, MA
> 01810, Tel: 978-684-3600. CMGI @Ventures has offices there, as well as
> at 3000 Alpine Road, Menlo Park, CA 94028. For additional information
> and a complete listing of the CMGI and CMGI @Ventures companies, see
> and


The crash you heard last week was all the doors slamming shut on any more financing. Now we choke on our losses or somehow make it to the promised land of profitability before the cash runs out. -- Jim Cramer, 5/1/2000

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