CollegeClub.com Takes $15M to School

In an effort to prove that the way to a college student’s heart is through the phone, CollegeClub.com raised $15 million June 6 from a syndicate of venture capital investors.

Convergence Partners of Menlo Park, Calif., led the second round financing that also included Viventures and a number of institutional equity investors, said Eric Rindahl, chief financial officer at San Diego-based CollegeClub.

Cruttenden Roth Inc. of Los Angeles placed the preferred stock offering. In fact, Rindahl joined the company from Cruttenden after having marketed the deal in its early stages.

“I told the investors I would be coming aboard and they were happy to see [the CFO position] being filled,” Rindahl said.

CollegeClub offers college students access to a full array of communications services including free e-mail, voice mail and Internet access. Through an exclusive agreement with MCI WorldCom, the company offers 1-800 access to the student user’s voice and e-mail accounts and can link the voice and e-mail accounts as well.

“If you do not have a computer, you can have e-mail set up with voice,” Rindahl said. “We consider ourselves a communications-based company.”

In order to maintain the communications focus, the company intends to create very little content, opting instead to establish partnerships with content providers.

The proceeds from the offering will serve as working capital to expand CollegeClub’s marketing initiative through all forms of online and offline media. Additionally, the capital infusion will be used to lure additional management to the company.

“With $12 million, more or less, the company currently gets 100 million impressions a month and has over 500,000 unique registered users,” said Eric DiBenedetto, general partner at Convergence Partners. “Sportsline and iVillage spent a lot of money to generate that traffic.”

CollegeClub earns revenue through ad sales and is beginning of an e-commerce initiative that DiBenedetto said would offer anything that is important to students. Supporting the company’s e-commerce and offline marketing effort is its network of more than 600 student representatives on college campuses..

Rindahl said CollegeClub’s ability to manage cash flow will determine its next financing step, although he said the company’s current financial situation could sustain an initial public offering.

“Our financing strategy is to make sure we can add value as we spend the money,” he said. “But at the same time, the cheapest source of capital is always the one that’s most attractive.”