By Phil Boeyen, ShareChat Business News Editor
Friday 22nd December 2000
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E-Loan was rescued from a potential downward spiral this week by The Warehouse, which has agreed to partner eVentures in the business-to-consumer side of the online mortgage and financial services provider.
eVentures boss Cindy Mitchener admits that although E-Loan had been doing comparatively well, the model worldwide has not been particularly successful.
"E-loan is a very expensive model with lots of other competition out there from traditional financial distribution sources.
"It was becoming obvious that it was not sustainable in its present form in New Zealand and that it needed further distribution than just online."
Another concern for Ms Mitchener was that, due to financial pressure on the US-based E-Loan, her company found itself funding all running costs of the New Zealand business even though they were supposed to be sharing the tab with the US service.
"They were supposed to be paying for 50% of the running costs but in the end eVentures was paying for 100%."
Although she is unsure of exactly how many mortgage applications were approved by E-Loan, Ms Mitchener says the service was performing better than its US counterpart, bringing around 24% of applications to closure compared with 18% in the US.
"In the end it became a question of how much more money and time would be needed to bring the business to profitability, and we saw that to be successful it would need to become a broader financial services company."
That of course is where The Warehouse comes in - providing the numbers and profile for the business.
Ms Mitchener says she is "overjoyed" with The Warehouse partnership, and also with the potential for what the company calls the business-to-business model for E-Loan.
Under that model E-Loan has gained the rights to distribute its "comparative engine" technology all over Asia apart from Japan and Korea. Although the software is currently used for financial comparisons, eVentures sees potential for using in for a number of other comparisons as well.
Cindy Mitchener also says there is plenty of further potential in the company's MessageMedia business, which is 20%-owned by NZ Post.
eVentures owns the rights to use all of the electronic direct marketing tools provided by MessageMedia in New Zealand but is currently only using one - UnityMail - which is an outbound electronic messaging service.
But what about all the other e-brands the company was promising to bring to the New Zealand internet market?
Although the company lost $2.61 million for the six months to the end of June, it still has plenty of dollars in the bank following its successful $30 million IPO earlier this year. While some may criticise the lack of speed in putting that money into investments, Cindy Mitchener is not about to make any apologies for taking things slowly.
"Everyone went into the dotcom industry too fast and under too much pressure. Now it's a matter of running these businesses under traditional disciplines."
Ms Mitchener says the company is running with low overheads, has the continuing support of its major shareholder, and is set to bring at least one new Softbank business - a supply chain service - to the market in the New Year.
The company has also has looked at a number of New Zealand investment options and one is currently under due-diligence.
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