Bizo has taken on $12.5 million in debt financing from City National Bank. The money adds up to a cheaply accrued rainy-day fund for a company that last year raised $10 million in funding and expects to close the second quarter on a $40 million annualized revenue run rate and cross into profitability by year's end.
"When we looked at how low cost bolstering our balance sheet was, we decided regardless of where the business is going we need to do this because it gives us so much option value. If we want to make an acquisition or decide to invest heavily in something ahead of the curve, we can," said Bizo CEO Russell Glass.
The money came cheaply for two reasons. "It's a combination of there being a lot of money on the sidelines that hasn't been invested," and lending banks would rather rack up interest revenue by backing a growing company versus signing off on someone's mortgage, Mr. Glass explained. Plus debt financing provides that capital without diluting the shares of Bizo's existing investors, as a typical equity funding round might have.
While Bizo plans for the financing to serve primarily as a backup credit card, it also bolsters a business in transition.
As it stands, 60% of Bizo's revenue comes from its ad network. American Express, AT&T and General Motors are among the roughly 750 advertisers that use the ad network to reach 120 million people, or "90% of the U.S. business audience," said Mr. Glass.
The remaining 40% of Bizo's business -- selling access to that audience data to publishers and through marketing services companies like Adobe and Eloqua -- is expected to become its dominant moneymaker. That latter business enables coordinated brand messaging where someone might receive an email from a company and then a synced online banner or social ad, "similar to how you experience Amazon," said Mr. Glass.
Crucial to that data business is the ability to plug into the dashboards operated by Adobe, Eloqua and others that give marketers a comprehensive view of their campaigns and customers. Therefore Bizo needs to pay for the backend technologies to support those integrations as well as the product managers, engineers and account support staff to build and manage them.
Bizo currently counts 118 employees but plans to end 2013 with 130 people on its payroll.