E-mail Change of Address Firm Scores $6.5 Million

In another example of how e-mail has come to dominate interactive
marketing, email change-of-address firm Return Path, which merged with
competitor Veripost in October, has snared $6.5 million in new financing —
no mean feat in a tight funding environment.

Sutter Hill Ventures led the round, with existing investors Flatiron
Partners, JP Morgan Partners, Mobius Venture Capital (formerly SOFTBANK
Venture Capital), and DoubleClick also participating.

Return Path provides a service aimed at helping businesses keep their
e-mail lists free of “dead” addresses. Clients join, in effect, an e-mail
partnership, which has them cooperating to keep one another’s lists clean.
When an e-mail user changes his address with one of the partner companies,
he’s given the option of making the change with the other partner companies
with which he has a relationship. The system therefore helps consumers make
changes more easily, which also helps Return Path clients.

“Return Path has wisely built its business by helping companies retain
existing customers and increase the value of those relationships,” said Greg
Sands, managing director with Sutter Hill. “Recent events highlight the
increasingly important role of commercial e-mail, and I’ve been very
impressed by the progress the company has made with customers and partners.”

Besides the anthrax scare, which proved to be a boon for e-mail
marketers, the shutdown of Excite@Home’s ISP, and the potential change of
thousands of e-mail addresses that will likely ensue, also serves to
highlight the importance of a service like Return Path’s. The company’s
research has found that 32 percent of consumer e-mail addresses change
annually, because of a change in ISP, job, or other events.

“We’ve seen a spike in e-mail address change registrations among
Excite@Home subscribers in December, as well as for job changers given the
fluid economic environment,” said Matt Blumberg, Return Path chief executive
officer. “Businesses whose customer e-mail lists contain these terminated
e-mail addresses are also impacted at the height of the online shopping
season. We can help them recover those unintended customer losses.”

So far, Return Path has registered 2.5 million e-mail address changes,
and has signed 120 companies to the service. Clients include the American
Bar Association, Palm Computing, Pottery Barn and Saks
Fifth Avenue. Partners include Acxiom Corporation, Bigfoot Interactive, DoubleClick, and Experian.

The funding comes hot on the heels of Return Path’s merger with
competitor Veripost, which occurred in October. The two start-up companies
emerged at around the same time, and the merged entity is effectively the
leader in the space. The first player to develop a commercial e-mail change
of address service, Active Names, shut its doors earlier this year.