eCircle AG

Ecircle, a German Internet-based group communications company, was founded in 1999 with a half-dozen employees and a few hundred thousand users on its new C2C platform. By early 2001, the co-founders had built eCircle’s technology platform, had acquired 4.5 million users and 90 employees, and had raised two rounds of financing. It appeared that the company had overcome the initial challenges of a start-up – it had cash, advertising customers for its C2C business, and two customers for its new B2B business. However, despite their early success, the co-founders faced a number of challenges. Could they leverage a relatively successful C2C group communications platform into other profitable business lines, especially B2B offerings? Could they fend off new competition within Europe and the U.S.? And could they manage their cash flows to survive the financing market slump? The tight economic environment and the struggles and failures of numerous Internet start-ups in early 2001 made growth strategy more of a challenge for eCircle. Its margin for error in such an environment was smaller than when the company first started.