Big business: Getting small biz online

And this Web-fueled, small-business boom appears to be creating its own boomlet. A growing field of players -- from tiny startups to established behemoths -- are rushing into the market to provide Web services to the exploding number of entrepreneurs and businesses looking to operate online.

It's sparked a spate of acquisitions. What's more, it's fueled a host of new startups -- some of which are attracting sizable sums of venture capital from blue-chip and big-name sources.

On Wednesday, for example, SmartAge Corp., a San Francisco company with a suite of Web-enabling services, disclosed it had closed a $7 million round of venture financing, most of it from Accel Partners, the same firm that backed such big winners as RealNetworks (Nasdaq:RNWK), Macromedia (Nasdaq:MACR) and UUNET Technologies.

SmartAge simultaneously announced a slate of investors and advisors that includes PC manufacturing mogul Michael Dell, Internet pioneer Vint Cerf and America Online honcho Ted Leonsis.

AOL's Netscape enters fray
Meanwhile, officials from AOL's Netscape said the free home-page hosting service they announced Wednesday (See: Netscape to offer free Web hosting) is also aimed squarely at enhancing the Small Business section of its giant Netcenter site.

In explaining the small business services section of their site, the Netcenter operatives also acknowledged the intensifying rivalry among those vying to be the provider of choice for small business owners.

Said Hillary Mickell, Netcenter's director of business programming: "Everyone and their brother in this space is trying to be the one-stop shop for small businesses."

The motive? Greed, of course. By some accounts, there are 7 million small businesses with products and services that could just as well be sold via the Web. But only about 20 percent are online.

"We think that the owner of this position -- to be the leading provider of online services -- would be worth billions of dollars," said William Lohse, the 47-year-old founder of SmartAge.

'Doubling' every quarter
Lohse, a former executive at Ziff-Davis Inc. (NYSE::ZD), which operates ZDNN, contends his year-old company has gotten off to a good start in claiming that mantle.

At last count, SmartAge boasts some 150,000 "members" and subscribers, up from 25,000 less than 15 months ago. While Lohse won't disclose actual revenues, he claims sales have been "doubling" every quarter.

SmartAge makes money in two primary ways.

The first is by selling advertising and sponsorships. Its members can either buy banner ads, which SmartAge places, or they can barter ad space on their sites in return for space for their ads on someone else's site. SmartAge also counts AT&T and Office Max among those who pay for sponsorship spots on sections of its site or the membership newsletters it produces.

The second is by selling subscriptions. SmartAge charges anywhere from $6 to $100 a month for what Lohse describes as the company's a la carte menu of services, to help small businesses build and promote their sites and to sell products and services on the Web.

Onslaught expected
Right now, SmartAge may be a leader. But its biggest challenge may be keeping hold of its self-proclaimed title. Lohse expects an onslaught of companies similar to his own.

"The venture capitalists have figured out this space," he said. "There's going to be a bunch of little companies coming into it."

One of them is a neighboring San Francisco startup named The Springfield Project. Its ambition: To become to small online businesses what America Online is the online consumers.

Founded last year, it's remained tantalizingly circumspect. And its secretiveness has generated no small amount of media-grabbing buzz.

But according to what it's published on its rudimentary Web site, it's clear that The Springfield Project is targeting the same market as SmartAge. It will offer similar services, such as building and hosting Web sites, serving as an ad-exchange clearinghouse, and helping its customers to monitor and analyze traffic.

SmartAge and Springfield have far more to worry about than just each other, though.

Along with Netscape's Netcenter, other portals have planted a flag in the same business services market. In February, Yahoo! Inc. (Nasdaq:YHOO) launched a new set of services aimed at providing a turnkey e-commerce solution. For anywhere from $100 to $300 a month, it offers merchants the capability to create and manage secure online stores.

Beware Scylla and Charybdis
Big as they are, though, even Yahoo! and Netscape are dwarfed by two other aspirants, who represent a modern-day Scylla and Charybdis for competitors: Microsoft and Intel.

Last November, Microsoft (Nasdaq:MSFT) purchased LinkExchange Inc., with its ad exchange network of some 400,000 Web sites, for a estimated $250 million, as the cornerstone for providing a portfolio of small business services through its MSN portal.

In December, Intel (Nasdaq:INTC) bought iCat, a Seattle company that started out developing software for building interactive CD-ROM catalogs, but then shifted gears in the midst of the Internet revolution to provide complete solutions for developing commerce-enable online stores.