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AMT News

November 15, 2000
Press Release

B-to-b startup raises $14M to eliminate paper checks

Xign Corp. will announce a $14.3 million round of funding today to commercialize a business-to-business technology that could eliminate the use of paper checks between buyers and sellers.

The Pleasanton, Calif.-based startup is developing software that simplifies and automates the existing electronic wire transfer system large companies use to settle payment with trading partners.

If successful, Xign could go a long way toward solving one of the more vexing problems with b-to-b e-commerce: The blizzard of paper invoices, statements and checks that are still required to settle electronic transactions.

Simply put, Xign allows corporate buyers to create and send electronic checks -- or e-checks. Once received and verified by the seller, the funds behind the e-checks are automatically deposited into the seller's bank account. The Xign technology works with the existing automated clearinghouse network used by banks to electronically transfer funds between accounts.

If developed to its potential, Xign's software would eliminate both paper checks and the paperwork and manpower that support such Old Economy payment methods, says Xign CEO Tom Glassanos.

"Business cycles are constipated by paper payments," he says. "Paper checks represent 75 percent of all noncash transactions in the U.S. economy, six times more than credit card payments, so we believe there is huge potential here to unleash b-to-b payment systems."

For instance, Glassanos says 30 billion checks are sent through the mail by businesses every year, which cost about $1.50 to print and process. If you add in the costs associated with dealing with invoices and other elements of the payment process, companies can spend about $75 to handle each transaction.

Xign is raising its $14.3 million in first-round funding from venture capital firms Matrix Partners and Charles River Ventures (and yes, the VCs deposited their money into Xign's bank account using its technology.)

The new investment adds to a previous angel round of funding led by Charles Schwab, who also sits on Xign's board of directors.

Of course, Xign faces significant competition. Clareon, a technology spin-off from FleetBoston Financial (FBF), is also developing similar technology that will speed electronic b-to-b payments and eliminate costly paper trails. Clareon is backed with additional capital from Mayfield Fund and Technology Crossover Ventures, among others.

B-to-b software firms like Ariba (ARBA) and Oracle (ORCL) have also inked partnerships with financial services firms to bring various forms of electronic payments and services to buyers and sellers conducting business through online marketplaces.

Xign's Glassanos says the new funding will be used to develop commercial software. Currently, Xign's technology is being used in a test program by the U.S. Department of Defense to electronically transfer funds to defense contractors.

Xign itself is a spin-off company of RDM Corp., a Canadian company that participated in an electronic check project sponsored by the U.S. Treasury.

For further information please contact:

Steve Wasserman or the team at AMT Capital at,
email: info@amtcap.com
phone: 1-800-519-0533 or 212-877-1588
website: www.amtcap.com

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