Internet Startup Targets Frequent Online Auctioneers
By Mark Boslet
10/04/1999

Dow Jones News Service
(Copyright (c) 1999, Dow Jones & Company, Inc.)

PALO ALTO, Calif., (Dow Jones) – Internet auction sites may seem to be capitalism at its purest: thousands of people selling thousands of items to thousands of buyers.

But an everyman's marketplace isn't what has evolved in cyberspace, said Munjal Shah, an Internet entrepreneur offering auction services to the busiest online sellers.

About 4% of sellers handle about 80% of transactions as measured by dollars, Shah said. Many place 200 or more items for auction each week, he said.

Shah's business – Andale Inc. of Santa Clara – plans to provide merchandising, back-office, financial-management and customer-tracking services to these frequent auctioneers.

On Tuesday, the chief executive will announce that an armful of venture capitalists have backed his vision and provided $19.6 million in funding. Participating are Accel Partners, Mohr Davidow Ventures, Oak Hill Venture Partners and angel investors, who have contributed $2 million of the total.

Mitch Kapor, the founder of Lotus Development Corp., which is now owned by International Business Machines Corp. (IBM), will sit on his board of directors.

Shah said he will make money by charging users of his site a fee for each sale they make. Fifty "charter" members are already using the Andale service in a pre-commercial test of the site. The company plans to have the site commercially ready in November.

Shah said he doesn't believe popular auction sites such as eBay Inc. (EBAY) and Amazon.com Inc. (AMZN) will block Andale's computers from linking to their auctions. Last week, however, eBay said it would block access for some sites that collect data from eBay, including auction comparison service AuctionWatch.com.

Privately held Andale was formed in April and has 23 employees.