Eclectic Radio lands funding from investors

BOULDER — Boulder’s Eclectic Radio, a consortium of Internet radio stations, has landed a “substantial” round of seed financing from several investment firms and individuals.

Although the amount is undisclosed, Eclectic’s Founder Joe Pezzillo says it’s between $500,000 and $2 million, “and it’s not at the low end of that range.”

The financing comes from Boulder-based Roser Ventures, Denver’s Wolf Ventures, IHatch in New York City, and private investors Bob Greenlee, Ray Skibitsky, Perry Evans, all from Boulder. Investing in the Internet is a huge gamble for venture capitalists, as the virtual market fluctuates wildly.

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Skibitsky, spokesman for the investor group and also the new president of Eclectic Radio, says that a second round of similar financing is imminent within the next three to six months.

“After three years of self-financing, we found we had limitations and didn’t have the firepower to continue competing in this market,” Pezzillo explains. “This money will help us get started on a new course and we’ll roll out on a grander scale.”

Eclectic Radio, the first Internet radio station in Colorado and one of the first in the nation, began broadcasting as Go-ga-ga on April 1, 1997. The company currently has eight varied-format radio stations, including Go-ga-ga and MacroRadio.net, broadcasting over the Internet.

“We can now relaunch our site with new content and expand to 25 or more stations by mid-January,” Pezzillo contends. He also plans to immediately double his current staff of seven.

Skibitsky, general manager of Boulder-based KBCO from 1977 through 1991 and radio consultant at SBR Creative Media since then, says the investor group was “looking for communication-broadcasting opportunities in today’s world that would break out of the standard sound-alike industry. Right now, there are only 10 to 15 types of formats on the air.”

So when Skibitsky, Greenlee — former owner of KBCO and Denver’s The Peak radio stations, Internet entrepreneur Evans and the other high-tech venture capital firms had the opportunity to invest in national broadcasting “with the tower on the Internet,” they thought of Pezillo, who needed funds to expand his repertoire.

Don Keller, the global software industry spokesman for PriceWaterhouseCoopers, in Broomfield, researched the MoneyTree Survey Report database of national venture capitalists who invested in Internet companies. In 1999, financing ranging from $75,000 to $2.2 million went to three Internet radio stations, while several other Internet radio stations were purchased by large corporations such as AOL and Yahoo.

“Most seed rounds for technology companies are under $2 million,” Keller maintains. “With the ubiquitous nature of the Internet and the infrastructure in place, there’s certainly an opportunity for investors and Internet companies to make money.”

Pezillo and the investment team intend not only to make money, “we will fortify our infrastructure and obtain much-needed additional bandwidth so we can approach a national-scale audience.” Eclectic Radio now has about 150,000 listeners a month on one channel.

To compete with the hundreds of Internet stations — “most of which are jukeboxes only,” according to Pezzillo, “we plan to offer innovation, superior content, audience interaction and personalization, and (video-streaming shows) that traditional radio can’t do. We’ll be able to have a unique relationship with a variety of listeners.”

Skibitsky admits that although 20 percent of Internet users have listened to Internet radio, only a small fraction of that listen regularly, and mostly at work — “it’s music designed for cubicles.” However, “eventually, Internet radio will be like traditional radio, with wireless Internet access virtually everywhere. There will be Internet Walkmans, high-speed connections and a whole range of Internet appliances. With this team, we have the opportunity to be a dominant player.”