Vcom.com Seeks to Dial Up $20M Second Round

Given the plethora of goods available for sale over the Internet, the dearth of start-ups selling communications services might be a surprise.

However, New York entrepreneur Steven Dresner intends to fill that void, and is preparing a private placement memorandum for a second round of private equity that could raise as much as $20 million for Vcom.com Corp., right on the heels of its $1 million seed financing that closed last month.

Vcom.com is a Web-based distributor of discounted communications services, which currently offers prepaid long distance, international callback and Internet service. Having launched its service just two weeks ago, the company soon will roll out additional services – domestic and international long distance, wireless, multi-media and real-time account management – through its Web site.

Unlike many e-commerce ventures, Vcom.com’s revenue stream is not focused solely on advertisements. Rather, the company has launched a partner program that applies traditional telecom compensation programs to Internet distribution. Additionally, the company has filed for 12 patents covering online distribution of telecom services.

“In telecom it is common to compensate agents through a recurring commission,” Dresner said. “We applied that online, so, unlike bounty programs that pay an up-front commission and have no follow, our model gives recurring commissions on every sale.”

In the course of developing the PPM, Dresner said the company has spoken with a variety of capital sources including traditional venture firms, investment banks and placement agents that have offered to coordinate an investor syndicate.

Having used the proceeds from the seed round to increase its staff to 24, develop its technology and establish an international distribution channel, Dresner said the company needs the Series B infusion to support a market expansion.

“Given what we are selling … a good part of the proceeds will go to hire top-notch technical talent from the industry,” Dresner said.

He added that sales and marketing expenditures will receive the lion’s share of the balance of proceeds in order to increase brand awareness. This financing will likely be Vcom.com’s final private equity offering. The exit strategy remains under discussion, as Dresner said some inside the company view it as an acquisition target rather than an IPO candidate.