Why pay cash, when you can just trade for services?
That’s the question driving BizX, which is not your traditional startup. Founded in 2002 by Bob Bagga, Chris Haddawy and Raj Kapoor, the Bellevue-based online bartering service last year posted revenue of $10 million after helping to facilitate more than $60 million in transactions.
Not bad considering the founders started the company on a measly $65,000 investment.
Now, the company is looking to get even bigger, and use technology to accelerate the way people trade for goods and services. It just pulled in $700,000 in a series A financing, with the deal led by Seattle super angels Rudy Gadre (the former Facebook general counsel) and Andy Liu (co-founder of BuddyTV).
“BizX’s trading platform and digital currency is a smart way to help local businesses thrive and build communities,” said Gadre, whose been investing in a host of Seattle area startups in recent months. CEO Bagga, who sold U-Barter.com to Network Commerce for $45 million in 2000, said that the overall vision of BizX is “to be the the world’s largest private currency.”
That’s an ambitious goal, and one where new rivals such as heavily-touted BitCoin also are attempting to gain ground. But Bagga thinks BizX has an advantage over its better known competitors.
“There are various forms of private or complimentary currency and new ones popping up. We feel we understand this space the best — especially when it comes to business,” said Bagga.
BitCoin, on the other hand, is more speculative in nature, making it harder to be used in transactions related to business, Bagga says.
More than 2,000 businesses and 8,000 individuals are currently using BizX dollars, including Inc. Magazine, The Oakland Raiders, Walt’s Auto Care Centers, Qliance and Cactus Restaurants.
Here’s how it works. BizX provides members the ability to buy and sell amongst each other without the use of cash. The virtual dollars are awarded (at an equal exchange to U.S. dollars), and those who redeem the virtual currency can do is in the company’s online marketplace or in-person like one uses a credit card.
For example, media companies can offer advertising inventory or restaurants can provide event space, exchanging those services for things they may need in their businesses (say a remodeling project or office furniture). Instead of doling out cash for those goods and services, members can pay with their BizX dollars, preserving cash.
In most instances, Bagga said that businesses who join as members can grow revenue by two to five percent, and save a similar amount in cash.
BizX takes a six to 7.5 percent cut of the transaction, and charges a monthly membership fee. It also offers a line of credit program so that businesses can begin trading almost immediately, which Bagga notes is “better than going to the bank.”
Here’s an overview of how it works through the words of Sal Orso of Industry Sign and Graphics.
Previously on GeekWire: Meet Rudy Gadre: This former Facebook and Amazon exec is lighting up Seattle’s angel scene