Internet

Small-business focus attracts big bucks

Bigstep.com is set to announce it has received $50 million in a third round of funding and partnerships with a slew of companies, including Compaq Computer.

Bigstep.com will tomorrow announce a funding round of $50 million and new partnerships with a slew of companies, including Compaq Computer.

The San Francisco-based Web site developer said it plans to use its third round of financing and new alliances to bolster its position in the application services provider (ASP) market. Bigstep offers a suite of Web hosting services to small businesses looking to build and market e-commerce sites, track visitors and communicate with customers.

Bigstep is a bit of a maverick in the sector because its service is free, said Zona Research analyst Jack Staff.

"They are giving away the store," Staff said. "They are giving away a lot up front in the name of acquiring and maintaining customers."

Noting that Bigstep's revenue plan is different from other ASPs, Staff said the company plans to make money by offering add-ons when its customers become successful and outgrow the basic services, such as email forms response.

"Small businesses are the holy grail of the American marketplace, but one-third of them aren't wired," Staff said. "That's a problem Bigstep solves."

Meredith McCarty, an analyst with International Data Corp., said he expects spending on services offered by ASPs to reach $150.4 million worldwide this year.

Staff pointed out that ASP growth is illustrated by Micron Electronics? stock gain of almost 80 percent this month on rumors that it will spin off its Web hosting businesses into a separate entity. The company principally manufactures personal computers.

Bigstep said it has 65,000 customers and adds another 1,000 each week. In addition to new partnerships with Compaq, Office Depot and Cardservices International, among others, it also has alliances with InterWest Partners, Pacific Capital Group and Worldview Partners. Previous investors include USVP, Mayfield, Partech, Angel Investors, Argus Capital, Staenberg Private Capital and Draper Richards.