OneSoft Is Riding a Vast Electronic Commerce Wave

By Richard McCaffery, Staff WriterOneSoft Corp. has wrapped up its first round of venture capital financing, landed a partnership with Compaq Computer Corp., and plans to raise another $20 million before year's end to fuel the Internet commerce company's fast expansion."We already have investors identified," said Jim MacIntyre, founder, chairman and chief executive officer of the Annandale, Va., company. "Our business is growing faster than we expected."Founded in 1995, OneSoft sells Internet commerce software and services primarily to commercial customers. An early contract to build a Web based network for the Energy Department ends next month.The company had $2.25 million in sales in 1997, and MacIntyre expects it to post sales of $10 million annually by 2001. OneSoft customers include Alloy Designs Inc., a New York company that sells a line of clothing to teen-agers; the W.K. Kellogg Foundation, Battle Creek, Mich.; and the Cisneros Group of Companies, Caracas, Venezuela.The second round of financing will be used to open new sales channels, develop products, seek out companies for acquisition and open offices in New York, London and Los Angeles. "We see a tremendous opportunity in the market to create a premier position in the next few years," said MacIntyre, who declined to elaborate further. The Internet commerce market is exploding. Jupiter Communications LLC, a New York digital media research firm, estimates the business to consumer electronic commerce market will grow from a projected $6 billion in 1998 to $41 billion in 2002.Neeraj Vohra, an electronic commerce analyst at Friedman, Billings, Ramsey Group Inc. in Arlington, Va., said there are hundreds of such companies vying for business today. A simple Yahoo! search using the key words "electronic commerce" returned hits from 680 Web sites in the United States alone, Vohra said.OneSoft's competitors are companies such as InterWorld Corp., New York; BroadVision Inc., Redwood City, Calif.; and Open Market Inc., Burlington, Mass.Despite the competition, Vohra said there's room for new players. "There's ample opportunity," he said. "We're truly in the early stages of electronic commerce."One of the ways MacIntyre expects to reach his sales goal is through the new partnership with Houston-based Compaq. On Sept. 22, the two companies announced a plan to bundle OneSoft's software with Compaq's servers for sale to companies in the financial services industry. "This provides us with a lot of leverage and gets us out to the market much faster than we could have done otherwise," MacIntyre said.KPMG International, Montvale, N.J., is the first customer to purchase a OneSoft/Compaq package. OneSoft is building and operating an Internet-based tax service for KPMG that will allow customers overseas to download tax information.How did MacIntyre, a 31-year-old philosophy and economics major, end up running an Internet commerce company? During high school, he started his first software company, a Burlington, Vt., business that developed a booking system for talent agencies in the Boston area. Before graduating from college, MacIntyre took a six-year leave and worked as an executive for the Cisneros Group, networking the vast company's computer systems and working on mergers and acquisitions.All told, MacIntyre has been the founder and chief executive officer of four companies, including Together.net, an Internet service provider that serves parts of New England, New York and southern Quebec.MacIntyre has been busy quickly expanding OneSoft. The company completed its first round of financing in August, securing $5.5 million from S.G. Capital Partners, the U.S. affiliate of Societe Generale of Paris, and Blue Water Capital LLC, McLean, Va.OneSoft's employee count has jumped from 32 in June to 70. MacIntyre put Douglas Peabody, a former vice chairman at America Online, and Henry Barratt, managing director of Blue Water Capital, on his board of directors.At the management level, MacIntyre has brought in:- Bradley Fordham as chief technology officer. Fordham has worked at Oracle Corp., AT&T Corp. and General Electric Co.-Frederick Hawkins as chief financial officer. Hawkins is a former financial consultant from Silicon Valley with a master's degree from Stanford's Graduate School of Business.-Joseph Rizzo as vice president of worldwide marketing. Rizzo has been named one of 1998's marketers of the year by Marketing Computers magazine. Other marketers in the top 10 included executives from Yahoo!, Dell Computer Corp., and Compaq."We felt really good about Jim and the people he had put around him," said Barratt, whose firm, Blue Water Capital, has invested $3.5 million in OneSoft. "Jim had bootstrapped the company, had a couple million in revenues and was running the company profitably." MacIntyre has leveraged a big chunk of OneSoft to lure talent. More than 30 percent of the privately held company's stock is set aside as options for employees, though MacIntyre remains the largest shareholder.The company's biggest challenge, Barratt said, is getting enough sales people on the street. "Right now, we have more opportunities than we can address," he said.OneSoft uses Internet commerce tools to help vendors get closer to their customers, MacIntyre said. Alloyonline.com, the Web site OneSoft developed for Alloy Designs, features chat rooms, message boards, contests and prizes, teen trivia, sports and music pages as well as an electronic catalogue for purchases.MacIntyre calls the Alloy Web site a miniature America Online. "The system is all designed to help a company manage its relationship with customers," MacIntyre said. Alloy Design's sales have quadrupled since January when it started using OneSoft's products, according to Matt Diamond, Alloy's chief executive officer. "It's a destination as much as it is an e-commerce site," Diamond said. "It's helping build up loyalty and traffic."