Cash shortage crunches Domania
|September 30, 2002|
Firm furloughs staff, seeks more capital from new investors
By Bridget McCrea
Inman News Features
Boston-based Domania has furloughed most of its 24-person staff, retaining only key people critical to keeping the company's systems up and running.
Chairman Steve Kropper said the decision to sideline the employees was taken because a short-term cash crunch left the company in a tight spot.
Domania was launched during the dot-com boom—in April 2000, to be precise—by a venture capital affiliate of CMGI. The company began life as a Web site that helped home buyers and sellers to determine the likely market value of a home based on transaction records and sales trends--a service that evolved from a home price-checking service originally introduced by INPHO/HomePriceCheck.
Domania in its first year signed deals to provide data to Homestore.com, Monstermoving.com and MarketWatch.com, among others, and received recognition in consumer magazines. The company also closed a second round of private financing that brought its total venture capital to more than $10 million.
But Domania discovered consumers weren't willing to pay much for home-price data, and the company then gradually shifted its focus to providing customer acquisition and retention software products to banks, mortgage lenders and real estate brokers and agents. Clients today include Chase Manhattan Mortgage, Countrywide Home Loans, Charter One Mortgage, Fleet Boston Financial, Homestore, IndyMac Bank, NRT, E-Loan, HomeGain and zipRealty.
Kropper said Domania now is looking for funding from title, mortgage insurance, credit and media firms. He's already closed a deal with one as-yet-unnamed firm for funding that will provide "continuity for supporting all products, client relationships and key staff members." The investor company will take over certain utility functions that might include managing the hosting of Domania's technology.
Kropper said he expects to sign more such deals in the next 45 days. He said monetary amounts won't be announced, but Domania probably will release the names of the companies when the deals are signed.
He attributed the cash crunch to the company's focus on purchase-money lending, a segment of the mortgage market that's taken a backseat to mortgage refinancing in the low interest rate environment.
"We made the right long-term decision, but we live in the short-term, and that's caused us some pain," Kropper said.
Domania employees are being paid to come into the office and keep the company's systems running. Kropper said all 24 employees were at work at some point this week and no positions have been eliminated.
"They're all poised to come back when we need them," he said, adding that there has been no interruption of service as a result of the furloughs.
Copyright: Inman News Service