Answers Corp. receives $13m. from Redpoint Ventures

Answers Corporation, a Jerusalem-based company, is ranked 48 out of comScore's 50 top properties for most visited sites.

By JENNA STARK
answers.com 88 224 (photo credit: Courtesy)
answers.com 88 224
(photo credit: Courtesy)
Answers Corporation, the creators of answer engines Answers.com and WikiAnswers.com, announced Tuesday that it has finalized agreements of a private placement of up to $13 million of convertible preferred stocks with California-based venture capital firm Redpoint Ventures. Answers Corporation, a Jerusalem-based company, is ranked 48 out of comScore's 50 top properties for most visited sites with 18.1 monthly unique visitors, according to comScore Media Matrix, a leader in measuring the digital world. Redpoint Ventures invested an initial $6m. of convertible preferred stock in Answers Corporation on June 16 at a conversion price of $4.50 per share with 50 percent warrant coverage, CEO and Chairman of Answers Corporation Robert Rosenschein told The Jerusalem Post in a phone interview on Tuesday ahead of the announcement. Redpoint maintains the option of investing an additional $7m. in twelve months, which would further raise the conversion price to $5.50 per share with 50% warrant coverage. "There were lots of funds that were interested in investing with us, but we were most excited about investing with Redpoint because they are very well-known, very savvy investment company," Rosenschein said. The last public company that Redpoint Ventures invested in was online advertising company Intermix, the parent of Myspace. "They will make a significant contribution not only with their cash, but with their knowledge and know-how," Answer Corporation's Chief Financial Officer Steven Steinberg told the Post. Redpoint Venture's current ownership in Answers Corporation is 14.5%, Rosenschein said. Redpoint partner Allen Beasley will join Answers Corporation's board of directors as part of the companies' agreement. Beasley was unable to be reached for comment by press time. Rosenschein said the investment will enable the company to focus on better connecting Answers.com and WikiAnswers.com and growing the site's traffic. "I think it gives us the strength and the stability of a stronger balance sheet and the funds to better execute our plans. It does not mean that we're going to go out and buy a lot of companies, but it does mean that if we find the right company for the right price we will consider some acquisitions," he said. "It's what we call 'smart money,'" Steinberg said. "We're pleased to have been chosen as a company they want to invest in and see it as a vote of confidence." Back in February, the Post reported that Answers Corporation's bid to purchase Dictionary parent company Lexicon was cancelled due to unfavorable market conditions. Rosenschein added that the company did not plan on revisiting that option and is looking forward. "We're proud to be growing this fast, we're excited about the partnership with Redpoint and we think there are great things coming," Rosenschein said. "We're proud of our teams both in Jerusalem and in New York City that are contributing to a great product line."