TheStreet.com Boosts Cash on Hand Through Late-Stage VC Stake

Financial website TheStreet.com (TSCM) announced Thursday investment firm Technology Crossover Ventures [TCV], which provides capital to late-stage private and public companies, will take a minority stake in the company, "in order to support its accelerated expansion strategy." Its $55 million investment gives it both preferred stock and warrants on common stock. The preferred stock converts into common stock at $14.26 a share. The five-year warrants permit TCV to buy about 1.1 million common shares of TheStreet.com at $15.69, or a premium of 10% (TSCM shares closed down 4.2% to $13.66, effectively boosting the premium). "Our alignment with TCV is a clear indicator of our intention to aggressively move forward with our expansion plans as a leading player in the online financial media sector," Street.com CEO Tom Clarke said. The company recently acquired financial social-networking site Stockpickr.com; BankingMyWay.com, which provides rates on CDs, savings accounts, interest checking, money markets, mortgage/home equity and auto loans; Rate-Watch.com, a provider of pricing solutions for banks and credit unions; and Promotions.com, a provider of interactive ad services. TheStreet.com also plans to launch a new pay site, Mainstreet.com, as well as relaunching its free sites. "Our confidence in TheStreet.com's growth strategy is based on an appreciation of its strong historical execution and an ability to intuitively navigate marketplace trends," TCV founding partner Jay Hoag said. TCV has in the past invested in Netflix (NFLX), RealNetworks (RNWK) and Expedia (EXPE) [TheStreet.com]. At the end of Q2, TheStreet.com had about $50 million in cash and equivalents and another $6.5M in receivables. It carries no long-term debt, but did owe about $20M in current liabilities (Yahoo Finance).

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Comments

[Frank Li]

Why do they need the money? And if they do need it, why are they paying a dividend?