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Priceminister is a website that allows private individuals or professionals to buy and to sell to each other cultural and entertainment products. At start, Priceminister was only targeting cultural products (books, CDs, DVDs) but is now offering wider ranges of products, especially multimedia hardware. The specificity of Priceminister is that they have a database of “product sheets” (including the bar code or SBN code) which are continuously created by users themselves.

The advantages of e-trade services are numerous (no stock, no logistics, and no requirement for working capital). Nevertheless, because they only charge 15% on each transaction, Priceminister has to deal a very large volume of products and, for this reason, had to make an initial investment in marketing. As they did not have any personal assets and had already hired people, Priceminister?s partners sought for business angels’ assistance. Luckily, business angels were reactive and knew the sector very well so that they understood the logic of entrepreneurship and of their business.

Priceminister was financed in three successive rounds according to the company’s development stages. The first round, which can be considered as seed capital, occurred in October 2000, right after the burst of the Internet bubble. Despite this difficult context, Priceminister’ partners raised about 750.000 euros through 35 business angels, with an average individual investment amounting to 30.000 euros. The second round took place when the company website was operational, in June 2001 (early stage capital) and amounted to a little less than 1 million euros with about 20 investors involved, mainly business angels that had financed the first round. This was the most important round that enabled the enterprise to start providing the service. Insofar as the web site had success, the entrepreneurs were able to make a third round, in January 2002, used to support the development, notably all the marketing aspects.

Economic success was quite immediate since Priceminister became profitable in September 2002. It is now the 4th E-trade website service in France with an average monthly turnover of 3.5 million euros and 1.5 million people visiting the website per month.

One of the success factors of Priceminister lies in the support received from investors throughout the launching and the development stage of the company. It is worth mentioning that clauses in a “shareholder?s pact” are determining factors for the partnership between investors and managers. To this respect, Priceminister?s partners systematically refused “buyouts” clauses as such options give a greater power to investors. Accepting these clauses would have meant that investors could have supervised the development strategy of the company (instead of just counselling), raised more money to dilute the managers’ capital or even sell the whole company at any time.

Sources: France angels