Gourmet-Food Retailer To Go Online With Ipo
The parade from Seattle to Wall Street is getting longer.
GreatFood.com, a Seattle-based Internet retailer of gourmet foods, yesterday filed with the Securities and Exchange Commission to issue a public offering worth as much as $33.8 million.
The company wants to sell 2.5 million shares of common stock priced between $10.50 and $13.50 a share.
It has registered to trade in the Nasdaq market under the ticker symbol GTFD. The company would have 6.5 million shares of common stock outstanding after the offering.
GreatFood.com plans to use the proceeds for advertising and marketing, expansion outside the United States and new software.
It becomes the first Seattle company to be taken public by W.R. Hambrecht & Co., which is shaking up the investment-banking world by holding auction-based initial public offerings (IPOs) on the Internet.
W.R. Hambrecht, founded in January 1998 by a co-creator of high-tech investment-banking firm Hambrecht & Quist, seeks to use technology to open the IPO market to individuals as well as large institutional investors.
GreatFood.com, founded in 1995 by Ben and Donna Nourse, started selling products including steaks, lobsters, fruit and other specialty foods on its Web site in March 1996.
Although its main focus has been individuals, it introduced a wholesale operation last year to connect specialty-food retailers with suppliers.
As with other industries, the Internet and electronic commerce have become a way to efficiently bypass traditional distribution chains that generally focus on larger buyers.
From its 1995 start to March 31 this year, GreatFood.com lost $2.3 million, while sales increased from $17,530 in 1996 to $747,860 in 1998. The majority - 86 percent - of 1998 sales came in the last three months of the year, during the holiday shopping season.
The market for gourmet-food items exceeds $30 billion, the company estimated in its filings.
Like GreatFood.com, W.R. Hambrecht is interested in using the Internet to change the way business is done in its industry, in this case, initial public offerings.
Investment banks focus on selling IPOs to large institutional investors who buy big blocks of stock. Smaller investors generally are locked out.
By using the Internet and auction techniques in its proprietary OpenIPO software, W.R. Hambrecht hopes to "level the playing field," as its Web site says.
Investors bid for the stock, letting price, not volume, determine who gets stock and how much the company nets.
Winning bidders all pay the lowest winning bid for the shares.
By staging the IPO on the Internet, said W.R. Hambrecht spokeswoman Sharon Smith, company executives don't have to undertake whirlwind road shows for top investors.
The company runs the road show on the Internet, allowing potential investors to watch the presentation at their convenience and letting the executives concentrate on their business.
W.R. Hambrecht has completed one IPO, that of Sonoma, Calif.-based Ravenswood Winery, selling 1 million shares at $10.50 each.
The firm also is handling the offering for Salon.com, an Internet magazine.
Helen Jung's phone message number is 206-464-2742. Her e-mail address is: hjung@seattletimes.com