The brainchild of Alex Edelstein, a veteran of Netscape Communications, Microsoft and Inktomi, Viralon launched its services in February. The timing proved inauspicious, and Viralon foundered along with online marketing competitors, most notably Netcentives.
"We picked a space that turned out to be a lot harder than we expected," Edelstein said in an interview. "Webvan, for example, was one of the companies that we targeted. That made it tough. We think that our approach still makes a lot of sense, but we need to find an environment where people are ready to invest in online marketing solutions."
The company has relinquished its San Francisco offices, laid off its 30 employees and is now "on ice," the founder said.
Half of Viralon's $3 million in seed funding came from Edelstein's own fortune. The remainder came from Kontiki founder Mike Homer and Tellme Networks Chief Executive Mike McCue--both Netscape veterans--along with Chase Hambrecht & Quist Managing Director David Golden and Angel Investors' Ron Conway.
Edelstein, who toyed with but has since rejected the possibility of running for elected office in Palo Alto, Calif., this year, held out hope that Viralon would rise again. A part-time employee is trying to find customers for the company's technology, but the start-up will remain on hiatus until the outlook for online marketing improves.
"Hopefully we'll be able to resurrect it, but for now we're keeping the cash burn low," he said.