Digital Chef Secures $7.5 Million Deal with AOL, Closes $10 Million in Venture Funding

Strategic Insights -

In a significant move, Digital Chef, a gourmet food and kitchenware e-commerce site, has partnered with America Online (AOL) to become the premier shopping partner for gourmet food and kitchenware on AOL's online service. The two-year agreement guarantees Digital Chef $7.5 million in minimum payments to AOL, with the potential for additional revenue sharing. This partnership follows a $10 million investment from several venture capital investors, which Digital Chef plans to use to rapidly acquire new customers and establish itself as a nationally recognized retailer.

Key Takeaways:

  • Digital Chef has partnered with AOL to become the premier shopping partner for gourmet food and kitchenware on AOL's online service.
  • The agreement guarantees Digital Chef $7.5 million in minimum payments to AOL over two years.
  • Digital Chef is eligible to receive a share of revenues generated through the Digital Chef site once certain thresholds are met.
  • AOL is also eligible to receive warrants in Digital Chef.
  • Digital Chef offers nearly 6,000 gourmet food and kitchenware items, including professional cookware and brand name products like Kitchenaid and Cuisinart.
  • Digital Chef will host live online chats with prominent chefs, providing access to thousands of CIA recipes, cooking instruction from famous chefs, and recommendations for foods, wines, kitchenware, and kitchen tools.
  • The financing was led by The Sprout Group, the venture capital affiliate of Donaldson, Luftkin & Jenrette, with additional investors including Scripps Ventures and Marquette Ventures.

Statistics:

  • $7.5 million: minimum payments guaranteed to AOL over two years.
  • 6,000: number of gourmet food and kitchenware items offered by Digital Chef.
  • 800: number of California wines available through Digital Chef.
  • 13 million+: number of AOL members, providing a potential customer base for Digital Chef.
  • $10 million: investment from several venture capital investors to support Digital Chef's growth.

Sources:

  • "MENLO PARK, CALIFORNIA, U.S.A., 1998 OCT 6 (NB) -- By Bob Woods, Newsbytes."
  • "http://www.newsbytes.com"
  • Reported By Newsbytes News Network, 19981006/Press Contacts: Margaret Ryan or Janine Dunne, for Digital Chef, 415-437-0437/WIRES ONLINE, BUSINESS