QXL Nets Record Backing

Apax Partners in February invested $12 million (euro 10.7 million) in QXL, Europe’s first and largest online auction service. The deal ranks as the biggest investment in E-commerce to date by a European venture group.

Backed by private investors, Financial Times journalist Tim Jackson set up QXL in September 1997 and subsequently raised funding from Jonathan Bulkeley, the CEO of BarnesandNoble.com, the online retailer. Apax’s investment, which will enable QXL to expand its marketing, operations and technical infrastructure, was for a stake of just under 30%.

QXL provides two online auction formats. Through QXL Direct, it auctions branded goods and services – including electronics, computer, household, jewellery and travel products – on its own account. QXL Exchange is a personal auction service that enables users to create their own Web auction sites for the private sale of goods of any kind.

In the four months leading up to Apax’s investment, QXL launched a German-language and currency version of QXL Direct, closely followed by a localised French site and by the UK and German Exchange sites. As a result of this expansion, QXL saw its sales revenue double. The company, which is growing at between 20% and 30% per month, currently generates annualised sales of $10 million and expects to become profitable within two years.

Dr Peter Englander, head of Apax Partners’ information technology group, said, “We are very excited to be able to back such a strong, capable and experienced management team in a high-growth, early-stage technology company. The US [online auction] market is already worth well over a billion dollars, and we believe this Internet application will be very large in Europe as well”. Michael Chalfen, also an Apax executive, added that, as Europe’s “first mover” with a world-class service, QXL was already in a leading market position.