Schoolpop: The death of bake sales?

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March 10, 2000
Web posted at: 8:04 a.m. EST (1304 GMT)

by Miguel Helft

(IDG) -- Using e-commerce to raise money for schools is not just good business. It's big business. At least that's what investors are betting.

Schoolpop, a 9-month-old online shopping mall that funnels a portion of shoppers' purchases to schools, said it has raised $41 million in funding, bringing the total amount it has raised to more than $47 million. The investment might be the largest ever in a for-profit company whose sole mission is to raise money.

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"We have not seen any private funding of this magnitude for a company that is in fundraising or is a for-profit charity," said Bob Wann, Schoolpop's CEO.

The idea behind Schoolpop is simple: If you want to shop for something online, first go to Schoolpop and then link to any of more than 200 merchants, from Amazon.com to Toyrus.com and the Gap. If you buy, a portion of the purchase price, typically between 3 and 7 percent, will go to the school of your choice. Wann said Schoolpop also takes a cut but that it is typically a much smaller one than the school gets. "Why would a shopper not do that? It is a no-brainer," he says

Since launching in June 1999, Schoolpop has signed up 16,000 schools. It hopes to ramp up the number to more than 50,000 through a partnership with Reader's Digest's QSP division, which specializes in fundraising for schools and youth groups. Reader's Digest led the investment in Schoolpop, along with Meritech Capital Partners. Other investors include Accel Partners, Chase H&Q, Wit Capital and Thomas Weisel Partners. Accel led an earlier $6.8 million investment round in Schoolpop.

Schoolpop will use the money to expand its programs both online and through alliances with offline merchants, said Bud Colligan, a partner at Accel and Schoolpop's chairman. Colligan also serves on the board of the Menlo Park-Atherton Education Foundation, the private fundraising arm of the Menlo Park School District.

Schoolpop has raised a modest $600,000 in the latest quarter for its affiliated schools. But such a sizeable investment indicates that its backers believe the company can raise much more ö and produce big profits in the process. The investment values Schoolpop at well over $100 million, and its backers hope to take the company public.

"We think there is a huge national issue relating to funding for schools," Colligan says. "People who have kids in school are a motivated and loyal group of consumers."

Colligan dismissed concerns that Schoolpop's do-gooder image might become tarnished if the company were ever perceived as too big and too profitable. "If there is a way to incrementally and dramatically change funding for schools across the nation, it will be accepted regardless of how much money [Schoolpop makes]," he says. "There are plenty of precedents."

Several other companies have been built on similar models. Most notably, GreaterGood.com gives a portion of purchases made through its site to one of many charities selected by the consumer. It has signed up organizations ranging from The Nature Conservancy to the National Federation for the Blind as well as Save Your Children, and it has raised $20 million in funding from investors. GreaterGood subsidiary YourSchoolShop.com competes with Schoolpop, as does the smaller Shopforschool.com.

Wann says sites such as his make fundraising for good causes so convenient that they should be able to account for a significant portion of online sales, which are expected to rise to $380 billion by 2003.

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