Palo Alto, California-based financial services firm X.com announced Wednesday that it has received $100 million (US$) in financing from a variety of new and existing investors.
X.com, which offers free e-mail payment services integrated with banking and investment services, has attracted some $125 million in venture capital since last October.
Madison Dearborn Partners led the latest round of financing, with Singapore-based Temasek, Vertex and Development Bank of Singapore, Singapore Telecommunications, Japan-based Compass Partners, Qualcomm, Deutsche Bank, J.P. Morgan, Sequoia Capital and others contributing.
“Our financing round was substantially oversubscribed, as we’ve seen a great deal of enthusiasm about participating in X.com,” said X.com executive vice-president Peter Thiel.
The company said it will use the funds to expand internationally, develop mobile platforms for e-commerce transactions and acquire new customers.
Though its offers a free e-mail payment service to over one million users — most of which are participants in online auctions — X.com’s ultimate ambition is to succeed where others have failed in becoming an Internet supermarket for financial services.
The company currently offers banking services through First Western National Bank and sells investment products through Barclays Global Investments. Launched in December, it has opened 200,000 accounts, which puts it ahead of better known rivals like E*Trade’s Telebank and Wingspan.
Many more rivals backed by large international banks have also staked a claim to the online financial services market. While these companies tend to target distinct demographics — small business, for example — X.com has gone after a broader market with ploys like offering $20 to open an account and giving $10 for a referral.
Critics say X.com’s account numbers are skewed by such ploys, while the company says it sees respondents as potential customers with one foot already in the door. The company confidently predicts that it will open 500,000 accounts by this summer.
X.com merged with e-mail payment service PayPal.com last month. Combined, the companies accept payment for nearly a half a million items on eBay (Nasdaq: EBAY).
X.com is attempting to rebound from a public relations fiasco in February, when it was reported that the company was allowing new customers to transfer funds without first verifying whether the person who was setting up the account had the right to transfer those funds.
At the time, X.com CEO William Harris admitted that the bank had some early problems, but claimed that his company quickly put procedures in place to prevent online banking fraud. As a safeguard, he said that only transfers from accounts in the same name would be accepted when opening accounts with X.com.