As trust in social media companies drops, Webtalk, a St. Petersburg-based technology company, expects to benefit.
Webtalk is a search engine that lets users communicate, collaborate and participate in ecommerce activities. While it combines a lot of features of Facebook, LinkedIn, Twitter and other social media, it is built on trust, said RJ Garbowicz, founder, chairman and CEO.
“When this takes off, it will change the world,” said Garbowicz, a serial entrepreneur who founded Webtalk in 2011.
The mission of the company — to organize and validate the world’s information to create a trustworthy virtual economy — keeps Garbowicz and his team of 18 employees going. “If we can help people create stronger relationships, personal and professional, we believe we will see more small business success and the quality of life will improve dramatically.”
The company has raised about $4 million to date, including its latest funding — $1.6 million in a round led by former technology executive and entrepreneur, Paul Woodcock. Woodcock, who sold his healthtech company, eHealthcare Systems, to Tampa Bay’s HealthAxis Group in 2013, invested alongside Steve Westphal, owner of the restaurant conglomerate GoToSteves, and Jeff Catherell, founder of Copper Shaker and The Estate, two of Tampa Bay’s most popular nightlife destinations. All were previous investors, Garbowicz said, and Catherell also is Webtalk’s chief business officer.
Webtalk expects to raise another $1.4 million in the same seed round of funding, giving the company a $20 million pre-money valuation. Once it closes the current seed round, it will have total cash investments of $5.4 million, excluding about $3 million in service contracts.
While Webtalk was founded eight years ago, development has been off and on, depending on funding, Garbowicz said. “There’s been stops and starts … and only about four-and-a-half years of actual development.”
Webtalk has grown its user base to more than 2.5 million total users since an invitation-only beta launch in July 2018. It has more than 65,000 active daily users and 680,000 active monthly users.
Users have to get an invitation to join Webtalk.
“Our fundamental product is a search engine, but the search engine doesn’t crawl the internet, it crawls our own data sets,” he said. “We have to collect, organize and store data for the search engine.”
In the first phase, Webtalk has had a consumer focus. The new funding will allow it to release an enterprise version of the software, along with launching mobile apps, and an affiliate program to drive new users and sales.
This month, Webtalk is launching a subscription platform that removes ads and tracking from advertisers.
Free users see ads and provide data to advertisers, but in exchange for that data, Webtalk will offer a referral program. It will share ad revenue with users who invite others to join.
“If someone joins because of a profile link or your invitation to join, we create a book of business for you and pay 10 percent of that [ad revenue] to you every month,” he said.
Between advertising and subscriptions, Webtalk expects to be cash-flow positive by the summer. That would give the company an advantage as it considers its next funding step, a potential “mini IPO” under the U.S. Securities and Exchange Commission’s Regulation A+, a provision that allows smaller companies to offer shares publicly without the full responsibilities of Securities Act registration.
“We haven’t seen any companies that are cash flow positive in a Reg A offering. They’re all pre or early revenue or pre-launch,” Garbowicz said.